Interactive methods and systems for control of investment data including demographic returns

ABSTRACT

A computer-implemented method, system, and apparatus for managing investment savings of individuals through an investment vehicle suitable for retirement, estate or general investment planning. The invention establishes the mechanics of the operations to create an open-end investment fund as a means for individual participants to earn both market returns on their investments and demographic returns (DR) on the actual demographic experience of the pool of investors who participate in the investment fund. Individuals can invest in the fund and make additional deposits and withdrawals at any time. Investors specify a payout schedule, and those who sell their investments, as scheduled, earn full returns, combining market returns and the DR. Investors who make unscheduled withdrawals from the fund, receive lower returns. The investment fund is customized, and administered by computer software that is available to both participants in the fund and to asset managers who offer the fund to investors.

CROSS-REFERENCE TO RELATED APPLICATION

This application claims the benefit of U.S. provisional patentapplication No. 61/914,785 filed on Dec. 11, 2013, the entire content ofwhich is incorporated herein by reference thereto.

FIELD OF THE INVENTION

The invention relates to a method, system, apparatus and media formanaging investment savings of individuals through an investment vehiclesuitable for retirement planning, estate planning or general investmentplanning. More particularly, the invention creates an investment fund asa means for individual participants to earn both market returns on theirinvestments and demographic returns (DR) on the actual demographicexperience of the pool of investors who participate in the investmentfund.

BACKGROUND

Financial services companies, such as asset managers, banks andinsurance companies offer investors several investment choices. Theseinvestment choices provide the opportunity for investors to earninvestment market returns, while also exposing them to investment marketrisks. Market return is the total return on an investment over a giventime period from capital markets sources, e.g., dividends, interest, andcapital gains. Market risk is the risk of losses in investment positionsarising from movements in market prices.

Asset managers provide funds in which investors can make deposits toearn market returns, less asset management fees, and investors bear allthe market risk of their investments. Similarly, banks provide depositinstruments (e.g., certificates of deposit) and investment funds, bothof which provide market returns to investors while exposing them tomarket risk. For this description, it will be convenient to refer tothese investment vehicles as “investment funds,” and the term “assetmanager” will refer to providers of investment funds including banks andsome insurers but the system is not limited to only these terms.

Insurance companies may offer immediate and deferred annuities with avariety of living benefits and death benefits, for which they may chargebenefit fees, as well as asset management fees. An annuity productusually requires a deposit or a premium, which then may be invested bythe insurer. Insurers provide guarantees such as minimum fundperformance or minimum level of living benefits or death benefits, sothat the investor may be partially shielded from market risk whileearning some of the market return on investment. In the followingdescription, these types of funds may be referred to as “insured funds”and the term “insurer” to describe any type of providers of insuredfunds. Some insurance companies may also offer investment funds similarto the asset managers described above.

Many investors rely on advice from third parties financial advisors, forexample Registered Investment Advisors in the US. These investmentadvisors may assist an investor construct their portfolio of investmentand insurance funds, either directly or through their employer or otherorganization. In some instances, these advisors also perform certainduties that may appear to be either management of investment funds orinsurance funds, even if they do not actually manage those funds. Forthe purposes of this description, any financial advisor that actuallyoffers investment funds or insured funds to an investor as describedherein would be considered to be an asset manager or insurance company.

Although investment funds and insured funds enable investors to save forthe future, there are some important differences between them. Forexample, investment funds usually do not make any guarantees ofinvestment performance, while insured funds often do, either explicitly(by stating the guarantees) or implicitly (via the premium pricingformula). Also, investment funds usually only charge fees for theirservices, while insured funds may charge both fees for services andpremiums for the insured benefits. Besides suitability criteria, assetmanagers usually do not underwrite investors for factors such as age,gender and health when accepting deposits in investment funds, whileinsurers usually do so before accepting deposits in insured funds. As aconsequence, bona fide investors can usually invest in an investmentfund at any time, but they may be turned down from investing in aninsured fund if they do not meet the insurer's underwriting criteria.Investment funds do not usually consider the demographic experience oftheir investors, while insured funds usually do. Insurers may explicitlyuse the concept of pooling the “risk of individuals” so that thecollective demographic experience of mortality, morbidity, lapse andother behavioral characteristics is considered when calculating thepremium and benefits to be provided to policyholders (i.e. investors ininsured funds). An insurer usually manages all the premiums it receivesthrough a single general account where investment performance anddemographic experience are shared by all policyholders across allinsured products, and several separate accounts, where investmentperformance and demographic experience are shared only by thosepolicyholders who invest in the same separate account, but is notlimited to only this example. Investment funds usually do not have toconsider the “intergenerational equity” of their investors since everyinvestor may buy and sell their holdings at any time, and differentgenerations of investors can participate in an investment fund,irrespective of the investment performance or demographic experience ofother investors. Insurers may perform actuarial calculations to ensurethat premiums and benefits are broadly equitable on an intergenerationalbasis to ensure fair treatment of policyholders in an insured fund whostart their participation at different times and can leave the insuredfund at any time in the future. By nature of its construction, aninsurance fund is usually expected to be equitable across the pool ofinsured policyholders, but it can be more or less economic thanalternative investment vehicles for any particular individual. Forexample, an investor who purchases an annuity “wins” by getting agreater payout of benefits if he or she lives longer than expected, andpriced for, by the insurer. In this case, the additional annuitypayments are paid for by the insurer, by indirectly using, for example,portions of payments made by other investors in the insured funds,insurance products, and the insurer's shareholders. Insurance companiescan offer some insurance products that are not part of an insurancefund. On the other hand, that same investor would “lose” if he or shedied before their expected lifespan since they would not receive as manyannuity payments, and would essentially have overpaid premiums relativeto benefits received. In this case, their relative overpayment can beused in part to pay the insurer's shareholders and also in part to fundthe benefits of policyholders with greater longevity. Since assetmanagers usually do not make any performance guarantees or provide anyinsurance-type benefits, they may not have any insurance-typeliabilities that require reserves to be held against those promises.Insurers usually do have to hold reserves against the promises theymake, and consequently have to hold capital against the risk that theassets and reserves fall short of requirement in adverse scenarios.

Both insurers and asset managers may enable investors to build wealthover time that becomes a source of income for the future. Although thereare many reasons for an investor to save, a major motivation is to savefor retirement. In the US and globally, improvements in health andsafety have resulted in an increase in longevity, thereby increasing thenumber of years that an individual spends in retirement. Simply put,individuals are concerned about outliving their savings. This hasresulted in a global demand for investment vehicles that grow savingsand generate cash flow during retirement years.

Asset managers have responded to this demand by providing a variety ofinvestment vehicles that allow investors to seek returns in varioussectors and slices of domestic and global capital markets. Irrespectiveof the vehicle and the particular investment focus, the basic underlyingstructure remains the same, i.e., investors take on market risk to earnmarket returns. Since there is no guarantee of investment returns orincome generation, the only way for an asset manager to help an investorbuild wealth is to provide superior market returns relative to the riskundertaken. As investors age, they tend to shift their investment focusfrom riskier asset classes to relatively safer asset classes. Assetmanagers provide investment funds that make that shift automatically(e.g., using target date funds) or at an investor's discretion. If cashneeds in retirement exceed the income generated by investments, aninvestor has the ability to sell part of his or her holdings to generatemore cash. One downside of such an approach is that once the holdingsare fully sold off, there is no further income from that investment.

Insurers have responded to this demand for retirement cash flow byselling several types of annuities to investors or policyholders. Alife-contingent annuity transfers the risk of outliving one's assets toan insurance company. There are a variety of annuities available toinvestors, but most fall into one of two broad categories—deferredannuities and immediate annuities. A deferred annuity is usuallypurchased before an investor retires by making a deposit in an insuredfund. The period between the purchase date and the annuitization datemay be referred to as the “accumulation phase” during which investedassets grow with market return and/or any guaranteed return. At the endof the accumulation phase, the “payout phase” begins and the investorreceives regular income or an annuity that is based on the accumulatedwealth, reinforced by the guarantees that were included in the deferredannuity policy. An immediate annuity usually does not have an“accumulation phase,” so the investor may make a deposit in an insuredfund to purchase an income stream starting immediately (typically onemonth after purchase).

At the time of purchase or annuitization, an investor can select thelength of term for receiving annuity payments. An annuity can bepurchased for a certain term, e.g. 30 years, irrespective of the actualyears that the investor lives—this does not transfer any longevity riskto the insurer. A lifetime benefit would pay an annuity regardless ofthe length of time that the investor lives—this option transfers theentire longevity risk to the insurer. Not surprisingly, a lifetimeannuity would be attractive to investors concerned about longevity risk,but due to the amount of risk transferred, the up-front premium requiredto be deposited in the insured fund will also be relatively higher thanproducts without a lifetime guarantee.

Insurers have also recognized that investors who are comfortable withinvestment returns generated by the insurer's general account tend toopt for “fixed” annuities. Investors who prefer to have more controlover their investment choices tend to opt for “variable” annuities andinvest some or their entire portfolio in separate accounts. In a fixedannuity, the insurer bears the market risk, and the investor receives aguaranteed rate that is reset periodically, irrespective of the actualunderlying performance of the assets. In a variable annuity, theinvestor bears the market risk and their asset values can rise and fallwith investment returns, although some of that risk is mitigated by theinsurer's guarantees.

Irrespective of these and other features not described herein, annuitiesare paid out of deposits invested in insured funds, so they provideinvestors with some participation in market returns, while shieldingthem from the full impact of market risk.

Besides insurance companies, tontines are another vehicle for poolingmortality risk. In the US and other countries, tontines are no longerallowed. Kent McKeever, Director of the Diamond Law Center at ColumbiaUniversity, defines a tontine in his article, “A Short History ofTontines” (Fordham Journal of Corporate and Financial Law, 2009) asfollows:

-   -   A tontine is an investment scheme through which shareholders        derive some form of profit or benefit while they are living, but        the value of each share devolves to the other participants and        not the shareholder's heirs on the death of each shareholder.        The tontine is usually brought to an end through a dissolution        and distribution of assets to the living shareholders when the        number of shareholders reaches an agreed small number.

As noted in the article, this definition of a tontine is broad enough toinclude a range of insurance products currently offered today. It may beuseful to consider some characteristics of a tontine. First, a fixedpool of participants become members of a tontine at inception, so no newparticipants are able to join after inception. Second, insurance-typeunderwriting is required so that the age, gender and healthcharacteristics of participants are substantially alike. Third, thepayouts to participants systematically benefit the last survivors at aloss to participants who die early.

In an article titled “A Mutual Fund to Yield Annuity-like Benefits”(Financial Analysts Journal, Vol. 63, 2007), Ralph Goldsticker of MellonCapital proposed an annuity-tontine combination that would be offered toage- and gender-specific cohorts of investors.

In their article titled “Tontines For the Invincibles: Enticing LowRisks Into The Health-Insurance Pool With An Idea From Insurance HistoryAnd Behavioral Economics: (Wisconsin Law Review, Vol 2010, pg 79;University of Pennsylvania Institute for Law and Economic Research PaperNo. 09-07), Tom Baker and Peter Siegelman trace the history of lifeinsurance tontines in the United States and the possible application tohealth insurance. They note that life insurance tontines were a productthat entitled survivors to receive a deferred dividend as a bonus uponsurvival after a certain number of years. Tontine life insurance becameso successful that it was reined in by regulators in 1906. The authorspoint out that recent developments with variable annuity productsreplicate some of the bundling of insurance and investment features ofthe early life insurance tontines.

The present invention described herein is not a tontine. In particular,the investment fund is an open-ended fund, so new participants can joinat any time in the future, and current participants can make additionaldeposits and make withdrawals in the future. Insurance-type underwritingis not required, so homogeneity of participants is not a requirement.Finally, there is a range of possible payouts for participants who leaveearly as well for those who stay longer, so there is no systematicstructure that guarantees that the last survivors are always better offthan investors who leave earlier for any reason, including death.

The present invention is also not a life insurance tontine. For example,the invention does not require payment of an insurance premium and thereis no assumption of the investor's risk by the financial institution,both of which are necessary parts of the definition of a life insurancetontine.

Insurers and asset managers have been competing, collaborating andlearning from each other to provide better products and choices forinvestors. Nevertheless, the differences described above remain,particularly regarding demographic experience. Insured funds may includethe expected and actual demographic experience of investors orpolicyholders when determining premiums or deposits and benefits,although that link may not be explicit or made clear and transparent toinvestors. Where insurance companies and investment funds do providesome participation in the demographic experience of investors orpolicyholders in their products, it is done on a “synthetic” basisrather than on an “actual” basis as described further below.

Insurance companies develop assumptions for expected demographicexperience (for example, mortality and withdrawal events, additionalbusiness by new policyholders, new contributions by existingpolicyholders and other policyholder behavioral characteristics) thatthey use in pricing and benefits calculations for products offered ininsurance funds, and for reserves and capital used to support thoseproducts. Insurance companies hold reserves and capital to absorb andsmooth out the difference between actual and expected demographicexperience as it emerges over time, as well as to provide for othercontingencies in their business. As actual demographic experienceemerges over time, the insurance company may update their assumptionsfor expected future demographic experience. In some instances, insurancecompanies may modify future premiums or benefit amounts based on theactual demographic experience of the group of policyholders on acollective basis, while at the same time adjusting their reserves andcapital to meet future deviations from expected demographic experience.Deviations from past demographic experience are absorbed by theinsurance company's reserves and capital and not used to adjustpreviously collected premiums or paid benefits. In other instances, somepolicyholders may receive a share of profits that may arise when thedifference between actual and expected demographic experience generatesgains for the insurance companies. This is particularly true for mutuallife insurance companies where policyholders are also shareholders ofthe mutual insurance company. The mutual insurance company may pay adividend to policyholders that reflects a participation in the company'sprofits, some of which may have arisen from the profits due to pastdemographic experience. These practices by which insurance companiesreflect policyholder demographics in future premiums and benefits orprovide a share of profits earned due to past demographic experience areherein termed as “synthetic” since: (1) various actuarial formulae andcalculations are used to a create a limited and approximateparticipation in the actual demographic experience of policyholders; (2)other groups such as insurance company investors and managers may alsoshare in any gains from actual demographic experiences; and (3) suchlimited participation is not generally concurrent with the occurrence ofthe actual experience but allocated at some later time.

Currently, investment funds do not provide any participation in thedemographic experience of their investors, so that is not considered indetermining returns to investors. Some investment funds may offerinvestors a participation in mortality risk, for example by includinglife-contingent insurance-linked securities (ILS) in the investmentportfolio, or by linking the return on the portfolio to a mortality ordemographic index. (An ILS is a type of asset-backed security that isexposed to the demographic experience of a pool of insurance or pensionpolicies either on an indemnity basis, i.e., actual experience of thepool of insured policyholders, or an indexed basis, i.e., by referenceto a mortality index that is a proxy for the actual experience of thepool of insured policyholders.) Such funds do offer a participation inthe demographic experience of the pool of insured policyholders throughthe reference securities or indices, but they do not offer the investorany participation in the actual demographic experience of fellowinvestors in that investment fund. As such, these investment funds alsoprovide investors a “synthetic” basis for participation in demographicexperience since the experience may be with reference to an index or toa population of policyholders that is different from the investors.

In contrast to the “synthetic” basis described above, the presentinvention uses an “actual” basis to provide demographic returns toinvestors. Such an “actual” basis means that: (1) investors directlycontribute to and benefit fully from participation in the actualdemographic experience of fellow investors in the same investment fund,without reference to an expected or indexed demographic experience orsuch similar synthetic device; (2) the actual demographic experience isfully reflected in the economic returns, net of fees, available toinvestors concurrent with the occurrence of such actual demographicexperience; and (3) there is no necessity of creating and maintaining areserve or capital buffer to absorb variations between the actual and anexpected, indexed or such other synthetic demographic experience.

One method for expanding on the prior art is to develop an open-endedinvestment vehicle that enables investors to participate in the actualdemographic experience of fellow investors in an investment fund.

BRIEF SUMMARY OF THE INVENTION

In accordance with principles of one embodiment of the presentinvention, systems, methods, and computer readable medium are providedthat implement an investment fund having a demographic return feature.

One aspect of the invention disclosed and claimed herein comprises acomputer-implemented method, system, apparatus and non-transitory mediato create and implement an investment fund that provides investors(participants) both market returns and demographic returns on theirinvestment. One embodiment of the invention establishes the mechanics ofthe operation, and implementation by the computer system, of theinvestment fund for both the participants in the fund and the assetmanagers who offer the fund to investors.

One embodiment of the invention is referred to as a ParticipatingRetirement Investment Account (PRIA). The PRIA is a new type ofinvestment fund that enables individual investors to save forretirement. It is a novel implementation of the concept of risk poolingbased on the demographic behavior and experience of individualparticipants who invest in a PRIA fund. A PRIA fund may be offered by anasset manager to investors either through their retirement savings plans(known as qualified and non-qualified plans in the US) or individually(i.e., not as part of any retirement savings plan). PRIA is aninvestment fund and not an insurance fund. Embodiments can also includean investment fund that includes some characteristics of an insurancefund but without departing from pertinent characteristics of aninvestment fund consistent with some or all of the objects and necessaryoperation of embodiments of the present invention. An investment fundthat incorporates some features of an insurance fund but remainssubstantially an investment fund, would still be considered aninvestment fund. Features such as requiring underwriting for entry intothe fund, or requiring that the fund participant fall in the sameclassification (e.g., participants in the same fund must be in the sameinsurance age bracket or demographic), or provision of a minimumguaranteed return on investment would be characteristics that wouldcause an investment fund to effectively be an insurance fund. Ingeneral, when combined with features of insurance products such thatPRIA would be regulated as an insurance product, PRIA may also beoffered via an insurance fund such as an insurance company SeparateAccount or General Account, in the US. PRIA and embodiments of thepresent invention can enable investors to participate in both marketreturns (without guarantees) and demographic returns.

An asset manager (including one that may be part of an insurancecompany) may set up and offer an open-ended PRIA fund to investors. Anyindividual can join a PRIA fund and make deposits and withdrawals at anytime, and there is no requirement for insurance-type underwriting basedon age, gender or similar factor. Participants or investors may depositmoney into a PRIA fund, and through it, into a choice of sub-funds (suchas mutual funds) where their money is invested. (In an alternativeembodiment, the choice of sub-funds may be limited to a single sub-fund,in which case the mechanics of the PRIA fund and the sub-funds may becollapsed into a single investment fund.)

A participant may earn a return from two sources. The first source maybe a market return, which is the change in their investment due tomarket dynamics, e.g., dividends, interest, and capital gains andlosses. The second source may be the demographic return (DR), which isthe change in their investment due to the change in the demographics oftheir fellow investors—this is the pooling of demographic risk.

Participants can sell their investments in each of the sub-funds thatthey own at any time with usually two consequences. First, if the saleis based on a pre-arranged schedule (typically after many years when theparticipant is in retirement and needs money to cover living expenses),the participant receives a higher return reflecting a combination of themarket return and the DR. Second, if the sale is made voluntarily orupon an individual's death, the participant or beneficiary (in the caseof death) receives a lower-than-market return according to a scheduledefined by the asset manager.

The difference between the higher return and the lower return may becontributed to a DR sub-fund. For simplicity, the DR sub-fund isdescribed as a single, separate investment fund, although otheralternatives are also available, as described below. All PRIAparticipants may be credited with a proportional share of the DRsub-fund based, for example, on the amount of their total investment inthe PRIA fund, or some other crediting formula. The DR sub-fund may bemanaged by the asset manager, and the investment strategy andperformance will be described in a manner similar to other sub-fundsoffered to investors.

There are other investment products that offer different returns basedon investor actions. For example, a bank's Certificate of Deposit paysinterest to investors if they remain invested for the full term. If aninvestor withdraws early, they do not receive the interest—and the bankretains that interest. PRIA's differentiated returns betweenparticipants who make scheduled and unscheduled withdrawals follows inthe same spirit as the bank CD's differentiated interest payments.PRIA's innovation, at least one respect thereof, is that the source ofthe DR return is the demographic actions of individual participants, andthe DR return is shared by the remaining participants.

A PRIA participant is not charged any insurance-type premium and doesnot receive any insurance-type benefits or guarantees. Such benefits andguarantees can be sold separately as an option to the participant, for aseparate fee. Such insurance-type features may also be combined withPRIA in order to qualify the product as an insurance product under localinsurance regulations.

The asset manager can offer several optional features and severalrequired components. For example, the asset manager may require that, atinception when the participant makes the first deposit, they select adate at which they will start to make scheduled sales of their holdings,the period over which the holdings will be sold, and the proportion ofholdings or the dollar amount of sales to be generated at each date.(This is similar to the accumulation phase and payout phase of adeferred annuity.) The asset manager may require a minimum number ofyears before scheduled sales begin and a minimum number of years overwhich the scheduled sales are conducted. The asset manager will disclosehow the lower asset value is calculated in the event that an investorhas an unscheduled sale of any part of their holdings. Transfers betweensub-funds under the same PRIA fund could be allowed without any loss ofvalue, except for any administration fee charged by the asset manager,since that does not result in a withdrawal from the PRIA fund. Moredetails of these features and components are described below.

From the asset manager's perspective, the PRIA fund operates in asimilar fashion to their other investment products, except for theinclusion of the demographic return component. As such, implementationcan be characterized as an “overlay” on top of regular fund sales andadministration. This means that the PRIA system and process can be addedon to an asset manager's conventional investment fund systems andprocesses. Since the asset manager is not offering any guarantees, andall payments to participants come from accumulated invested deposits, noinsurance-type reserves need to be held. A single asset manager canoffer several PRIA funds, each with its own features to cater todifferent segments of their client base.

From an investor's perspective, the PRIA fund operates in a mannersimilar to a standard retirement savings vehicle, with some differencesrelated to the operation of the DR aspect. The investor can make aninitial deposit and additional deposits into the PRIA fund at any time,subject to the rules of any retirement plan, if the PRIA fund is offeredunder such a plan. There is no age, gender, medical or otherinsurance-type underwriting process required when investing in a PRIAfund, although the asset manager may choose to do so at theirdiscretion. If the investor elects to purchase additional insuredbenefits that are available at the same time, then an underwritingprocess may be required. There may be no requirement to elect aretirement age at which date payouts would be made, although theinvestor would most likely be required to elect a starting date at whichscheduled payouts would be made. The investor can withdraw funds at anytime, with the provision that unscheduled, early withdrawal results in alower payout than a scheduled sale. With each deposit, the investormakes a selection of sub-funds based on their individual preferences,and allocates their deposit accordingly. The investor has a view oftheir investment position on a regular (e.g., daily) basis, and cantrack the market return they are receiving, as well as the contributionfrom their share of demographic return. An investor can invest in morethan one PRIA fund to diversify both their market return as well astheir demographic return opportunities.

From an economic perspective, PRIA provides demographic risk poolingwithout charging a premium to each participant for the demographic riskof the pool. Since no death benefits, withdrawal benefits, or pensionsbenefits are provided within PRIA, the investor should not pay aninsurance-type premium. The PRIA fund operates on a zero-sum basis,i.e., the PRIA fund is a closed system in which all invested assetsultimately pay all scheduled and unscheduled payouts and fund expenses.Each participant can become a contributor to the DR sub-fund by makingunscheduled sales of some or all of their holdings early, or a receiverfrom the DR sub-fund by making scheduled sales of their holdings, orboth a contributor and receiver if they make both scheduled andunscheduled sales of their holdings. Since the potential amount that aninvestor may contribute to the DR does not depend on their age butrather on the length of time they are invested in the PRIA fund, theconcept of generational equity described for insurance products does notapply in the same way.

An investment in a PRIA fund is expected to form part of a portfolio offinancial planning instruments that an individual would own. They woulduse life insurance to protect their family from their untimely death.They would own traditional investment funds to grow wealth and topreserve liquidity for unplanned financial needs. The PRIA fund formspart of that portfolio to enable an investor to save for the long-term,and to have a mechanism to maximize the investments that they can drawfrom in their retirement years.

A participant in a PRIA fund is making an economic trade-off based ontheir utility of having funds in retirement versus having to forego someof their investment return upon unscheduled voluntary or involuntary(death) early withdrawal. For instance, an investor can rationalize thatupon death they do not need the full return on their investments so longas a sufficiently reasonable amount is paid to their heirs, while theywould prefer to have a higher payout stream in retirement to supporttheir lifestyle in old age.

A computer implemented system can be implemented that is structured tocarry out the foregoing functionalities and provide related interactedfeatures and tools. A computer-implemented system can be directedtowards managing an investment fund having a demographic return feature.The system comprises one or more computers and connected electronicstorage that stores computer-executable instructions and data that isused by the computer-executable instructions, wherein the one or morecomputers, the computer-executable instructions, and data, together,configure the computer system to provide an interactive application thatprocesses a structure for the operation of the investment fund whichincludes handling interactions with potential participants,participants, and administrators by way of network connections withclient end devices. The interactive application may also be referred toas the PRIA Overlay System (POS) or implemented by the POS.

The computer is also configured to register participants in theinvestment fund, and receive and store personal information about theparticipants. The computer is further configured to create individualaccounts for participants in the investment fund, wherein accounts areavailable to be created in the same investment fund for participantsthat are in multiple diverse classifications and provide an accountcreation interface through which participants self-select a start dateand payment schedule for a liquidation phase of their account, whereinthe self-select start date can be configured to begin immediately or atsome time in the future. The POS may also provide the account creationinterface.

The computer is also configured to receive and store principal dataidentifying one or more investment contribution deposits made by eachparticipant into the fund and generate and store ownership data thatidentifies an ownership stake generated from the use of the investmentcontribution deposit for each participant in an investment vehicleavailable in the investment fund.

The computer is configured to implement the structure governing theoperation of a demographic return fund as part of the investment fundand generate and store additional ownership data by creating ownershipin the demographic return fund as part of the investment fund, whereinthe system is configured to create the demographic return ownershipunits for each participant in the investment fund by a specifiedformula.

The computer is further configured to receive investment return dataabout a market return generated from a corresponding investment vehicleand generate output data that specifies a calculated current value of aparticipant's ownership stake in their investment vehicle. The computeris also configured to implement an account value interface through whichthe computer system interacts with other computer systems to receive andprovide information about the current value to fund participants,wherein the current value contains a current value of the investmentcontribution of that participant in the investment vehicle incorporatingmarket returns and a current value of demographic return ownership unitsof that participant. The POS may also provide the account valueinterface. The computer is configured to implement a withdrawalinterface through which participants request to withdraw funds fromtheir account and implement a client life status interface through whicha participant's death is reported to the system and the systemautomatically closes individual accounts upon notification of eachparticipant's death, and withdraws and issues payment of account value,subject to applicable deduction or charges, to designated beneficiaries.The POS may also provide the client life status interface.

The computer is further configured to deduct a calculated amount of thecurrent account value from a corresponding account and automaticallydeposit the deduction into the demographic return fund when one or moreindividual participants die before that participant's self-selectedpayment schedule has been fully met, or when one or more individualparticipants request to withdraw from their account before thatparticipant's self-selected payment schedule has been fully met, whereinthe computer system manages the demographic return fund such that theautomatic deposits are substantially all of financial contributions bydeposit into the demographic return fund. Preferably, the automaticdeposits are all of the financial contributions but it is not limited tothis. The computer is also configured to implement a payment processthat processes withdrawal requests and generates an output signalindicating approval of the withdrawal and issues a signal that issues atransfer to accomplish the payment and a display of the amount ofpayment and implement a demographic return account value interface,wherein the demographic return account value interface adjusts upwardsthe current value of participant ownership units in the demographicreturn fund when the automatic deposits are made into the demographicreturn fund upon the death of participants and closing of correspondingaccounts or upon withdrawals made before the self-selected paymentschedule has been fully met, and wherein the demographic return accountvalue interface adjusts the current value of participant ownership unitsin the demographic return fund by incorporating financial returnsgenerated from investment of contributions and reinvestment of financialreturns in the demographic return fund.

The computer is configured to issue scheduled payments from theinvestment fund starting from the specified start date selected by eachparticipant, determine withdrawal amounts from the investment fund forthe amount of payment from each participant's current value from theirinvestment vehicle and current value of that participant's currentownership units in the demographic return fund.

In one embodiment, the system further comprises a fund terminationcomponent that is configured to determine, as an ongoing process,whether a certain minimum amount of investment remains in the fund,minimum number of participants remain in the investment, or certainminimum level of diversity in the classification is maintained, andcloses the fund when the system determines that data reflects that thefund is below the minimum. In another embodiment, the system furthercomprises wherein the fund termination component is configured toperform the ongoing process after a preconfigured inception period iscompleted. In yet another embodiment, the system comprises a fundtermination component that after an initial inception period monitorscharacteristics of the investment and if certain characteristic orcharacteristics are met terminates the fund and issues correspondingpayments. In one embodiment, the system comprises wherein the accountcreation interface provides each participant with the option to selectfrom different investment vehicles for application of their investmentcontribution.

In another embodiment, the system is further configured to permitparticipants to make additional investment contributions after theiraccount has been created. In yet another embodiment, the system isfurther configured to close a particular participant's account when thatparticipant's scheduled payments have ended. In one embodiment, thecomputer system is further configured to include an administrativeinterface that provides interactive options that allow fund providers toconfigure working characteristics of the fund. In another embodiment,the computer system is also configured to be implemented as an overlaysystem. In yet another embodiment, the computer system is furtherconfigured to include a sales system that provides models of theoperation of the investment fund incorporating a demographic returnfund. In one embodiment, the computer system is also configured to allowparticipants with diverse age classifications including participants intheir 20's, 30's, 40's, 50's, and 60's. In another embodiment, thecomputer system is also configured to allow participants with diversegender classifications including male and female participants. In yetanother embodiment, the computer system is further configured to allowparticipants with diverse health classifications.

In one embodiment, the system further comprises wherein the computersystems implements the investment fund as an open ended fund. In anotherembodiment, the system comprises wherein the computer system subjectswithdrawals or investment contributions to administrative expenses orfees for managing the investment fund. In yet another embodiment, thesystem further comprises wherein the demographic return fund is designedso that the current value of demographic return fund is zero until afirst automatic deposit is performed when a participant dies or an earlywithdrawal is requested. In one embodiment, the system further comprisesan interface for interactivity with financial advisors or otherintermediaries. In another embodiment, the system further comprises thatthe self-select start date and payment schedule may be modified by theparticipants. In yet another embodiment, the system also comprises thatthe ownership units in the demographic return fund are derived from theownership stake in the investment fund using the specified formula.

In one embodiment, the system further comprises that the specifiedformula can use factors other than the ownership stake in the investmentfund to determine ownership units in the demographic return fund. In yetanother embodiment, the system also comprises a component that permitsparticipants to login to view the status and value of their account froma website or client application, and to also request to make withdrawalsor terminate the account and in response, the fund processes therequests and generates graphical display and issues payments from theinvestment fund. In one embodiment, the system further comprisesreceiving a request to open account over network connections from apotential participant and stores potential participant informationspecifying the classification of each potential participant, uses thatinformation to open an account and set up the investment fund, and alsouses the data to check threshold information about classification todetermine whether to close the fund.

In another embodiment, the system is further configured to allow one ormore participants to make a specified number of withdrawals withoutapplying a deduction of the calculated amount of the current accountvalue from the corresponding account. In yet another embodiment, theself-selected payment schedule is subject to approval by anadministrator or asset manager of the system, as well as anymodifications to the payment schedule. In one embodiment, theself-selected payment schedule is modifiable as permitted by the assetmanager. In another embodiment, some of the modifications are subject toa fee. In yet another embodiment, the payment schedule is required toinclude a minimum number of payments and/or require a minimum period oftime before any payments will be paid out. In one embodiment, the systemis further configured to provide a participant with the option to takeless than the scheduled payment amount on any particular payment date.

A computer-implemented system can be directed towards implementing aninteractive platform on a computer system that permits the creation of afund having a demographic return fund and including interfaces forparticipants, administrators, and fund managers to interact with thefund to deposit, withdraw, or view funds, wherein the system isconfigured to include the demographic return fund as an open fund thatreceives deposits as a result of fund participant's early withdrawal ordeath before that participant has been paid under their self-selectedstart and payment schedule.

A computer-readable storage medium such as a non-transitory computerreadable medium can comprise instructions executed by a processor orelectronic device to perform at least some of the steps of at least someof the system described herein (e.g., so as to provide features,functions, processes, or systems described herein).

It will be understood by those of ordinary skill in the art afterreading the disclosure and as expressed herein that if desired, one ormore features of elements of the exemplary system, method, or computerreadable medium can be removed, modified, or re-arranged to arrive at abroader or different version of the system, method, or computer readablemedium without departing from the spirit and scope of the invention.

BRIEF DESCRIPTION OF THE DRAWINGS

Having thus described preferred and exemplary embodiments of the presentinvention in general terms, reference will now be made to theaccompanying drawings, which are not necessarily drawn to scale, andwherein:

FIG. 1 is a representation of the main objects and entities in thepresent invention showing a participant's ownership of a unit of assetsin a PRIA fund offered by an asset manager, in accordance with oneembodiment of the present invention;

FIG. 2 is a schematic flow diagram of an asset manager's process fromdesigning a PRIA fund to its operation and ultimate closure, inaccordance with one embodiment of the present invention;

FIG. 3 is a schematic flow diagram of a participant's process fromlearning about a PRIA fund to investing in it, and ultimately sellingthe investments and leaving the PRIA fund, in accordance with oneembodiment of the present invention;

FIG. 4 is a schematic flow diagram of a PRIA Fund Design System, inaccordance with one embodiment of the present invention;

FIG. 5 is a schematic flow diagram of a PRIA Fund Administration Systemas an integration of the Asset Manager Administration System and thePRIA Overlay System, in accordance with one embodiment of the presentinvention;

FIG. 6 is a schematic flow diagram of a PRIA Participant Sales Systemthat includes an Illustration Simulator, in accordance with oneembodiment of the present invention;

FIG. 7 is a schematic flow diagram that shows the three PRIA SoftwareSystems accessed by Asset Manager Applications and ParticipantApplications, in accordance with one embodiment of the presentinvention;

FIG. 8 is a schematic flow diagram that illustrates the data flowbetween an Asset Manager Administration System and the PRIA OverlaySystem, in accordance with one embodiment of the present invention;

FIG. 9 is a diagram that illustrates the concept of the DemographicReturn over time, in accordance with one embodiment of the presentinvention;

FIG. 10 is a schematic block diagram that illustrates that a Sub-fundcan be used simultaneously and flexibly by a PRIA fund and otherinvestor types, in accordance with one embodiment of the presentinvention;

FIG. 11 is a diagram that illustrates the concept of the Contribution toDemographic Returns, in accordance with one embodiment of the presentinvention;

FIG. 12 is a schematic block diagram that illustrates the range ofdesigns for a PRIA fund, ranging from Simple to Complex, in accordancewith one embodiment of the present invention; and

FIG. 13 illustrates a block diagram with various computer systemcomponents for use with an exemplary implementation of a system formanaging an investment fund having a demographic return feature, inaccordance with one embodiment of the present invention.

DETAILED DESCRIPTION

Preferred embodiments of the present invention now will be describedmore fully hereinafter with reference to the accompanying drawings. Thepresent invention can, however, be embodied in many different forms andshould not be construed as limited to the preferred embodiments setforth herein; rather, these preferred embodiments are provided so thatthis disclosure will be thorough and complete, and will fully convey thescope of the invention to those skilled in the art. The presentinvention may be implemented with different combinations of hardware andsoftware. If implemented as a computer-implemented apparatus, thepresent invention is implemented using means for performing all of thesteps and functions described herein. The present invention can beincluded in an article of manufacture (e.g., one or more computerprogram products) having, for instance, computer useable media. Themedia has embodied therein, for instance, computer readable program codemeans for providing and facilitating the mechanisms of the presentinvention. The article of manufacture can be included as part of acomputer system or sold separately. It will be appreciated by thoseskilled in the art that changes could be made to the embodimentsdescribed herein without departing from the broad inventive conceptthereof. It is understood, therefore, that this invention is not limitedto the particular examples disclosed, but it is intended to covermodifications within the spirit and scope of the present invention asdefined by the appended claims. For the purposes of exposition, onepreferred embodiment of this invention is referred to as a ParticipatingRetirement Investment Account (PRIA).

A PRIA fund is an open-ended investment fund offered by an asset managerto investors either through their retirement savings plans (known asqualified and non-qualified plans in the US), or individually (i.e., notas part of any retirement savings plan), that enables investors toparticipate in both market returns (without guarantees) and demographicreturns. Any individual can join a PRIA fund and make deposits andwithdrawals at any time, and there is no requirement for insurance-typeunderwriting based on age, gender or similar factor. Participants(investors) deposit money into a PRIA fund, and through it, into achoice of sub-funds (such as mutual funds) where their money isinvested.

A participant earns a return from a combination of market performance ofinvested assets and demographic experience of the pool of investors.Market return is the change in the value of investments due to marketdynamics, e.g., dividends, interest and capital gains and losses.Demographic return (DR) is the change in the value of investments due tothe change in the demographics of their fellow investors.

Participants can sell their investments in each of the sub-funds thatthey own at any time. If the sale is based on a pre-arranged schedule(typically after many years when the participant is in retirement andneeds money to cover living expenses), the participant receives a higherreturn, reflecting a combination of the market return and the DR.However, if the sale is made voluntarily or upon an individual's death,the participant or beneficiary (in the case of death) receives a lowerreturn according to a schedule defined by the asset manager.

The difference between the higher return and lower return is contributedto a DR sub-fund. All PRIA fund participants are credited with aproportional share of the DR sub-fund based on the amount of their totalinvestment in the PRIA fund or some other determination. The DR sub-fundis managed by the asset manager and its investment strategy andperformance will be described in a manner similar to other sub-fundsoffered to investors.

A PRIA participant is not charged any insurance-type premium and mostlikely does not receive any insurance-type benefit or guarantees. Suchbenefits and guarantees can be sold separately as an option to theparticipant, for a separate fee.

At the time of the initial deposit, the participant defines a periodover which no scheduled payouts will be made, and another term overwhich investments will be sold per schedule to provide retirementincome. Since all payouts will be made from the sale of invested assets(without guarantees), the asset manager will not be required to holdinsurance-type reserves. To the extent that the asset manager offersadditional features such as guarantees, those would be priced andreserved separately.

An automated feature can be included that monitors the data representinga current state of investments, participants, and participantdemographics and applies a criteria to determine whether certainthreshold (e.g., minimum threshold) is met. This ongoing process can runon the computer system and use the stored data to evaluate the state ofthe fund and commence a process to terminate and terminate the fund whenone or more thresholds is not satisfied by the current data. This may beperformed after an initial inception period for instituting the fund andtherefore, the fund can be terminated for example because the systemdetermines the number of participants fell below the threshold or theamount of invested funds is insignificant.

PRIA Objects.

Referring to FIG. 1, showing a participant's ownership of a unit ofassets in a sub-fund of a PRIA fund offered by an asset manager, thesemain objects and entities are defined as follows:

An Asset Manager, m, 102 is an asset management company (including abank or insurer) that offers multiple PRIA funds 104. In themarketplace, there may be several asset managers, designated by thevariable in where in ranges from 1 to a maximum number of M assetmanagers.

A PRIA Fund, f, 104 is a pooled investment fund offered by the assetmanager 102 through which a Participant 110 aggregates investments inmultiple sub-funds, g, 106. An asset manager may offer several PRIAfunds, designated by the variable f, where f ranges from 1 to F, themaximum number of PRIA funds offered by a single asset manager. In thisembodiment, the convention that the PRIA fund is a means to organize allthe sub-funds that make investments is used, and that the PRIA fund doesnot make any investments directly itself. In alternative embodiments,the PRIA fund can also make direct investments itself. In anotherembodiment, the PRIA fund and its sub-funds are combined so that thereis only one fund in which the participants make deposits and that samefund makes investments directly. These are all variations on thepreferred embodiment, which will be used to describe the invention.

A Sub-Fund, g, 106 is a member of the family of investment choicesavailable to a participant 110 under a PRIA fund, f, 104. A PRIA fundmay offer several sub-funds, designated by the variable g where g rangesfrom 1 to G, the maximum number of sub-funds offered under a single PRIAfund. A sub-fund can be any investment vehicle offered by the assetmanager. For example, it can be an investment fund such as a mutual fundin which a professional portfolio manager purchases several investmentson behalf of investors in that mutual fund, or it can be a singlesecurity, such as publicly-listed shares of a corporation. Since asub-fund can be offered by more than one PRIA fund 104 of an assetmanager 102, it is important to state both f and g when referring to asub-fund.

A Participant, p, 110 is a customer of the asset manager 102 who caninvest initially and subsequently on multiple instances over time in anyPRIA fund 104 and its sub-funds 106 offered by an asset manager. Aparticipant may invest in a PRIA fund through mechanisms where such aninvestment opportunity is available. For example, in the US, a PRIA fundmay be available to a participant through a corporate retirement plan, arollover into a qualified Individual Retirement Account (IRA), anon-qualified plan, or outside any qualified retirement plan. Aparticipant may invest with the assistance of a Registered InvestmentAdvisor (RIA), another investment advisor, or without such assistance.

A Lot, q, 112 is a unique investment made by participant, p in fund, f'ssub-fund, g that differs from another investment made by the sameinvestor in the same sub-fund of the PRIA fund by at least oneparameter. Most commonly, this parameter is the date on which theinvestment is made, although the number of units purchased and theamount deposited could be different as well. If another differentiatingparameter is available, then lots may be distinguished by differentvalues of such a parameter. Among other information, a lot may identifythe date of investment; the number of units initially purchased and thepurchase price; the number of units that may have been sold and thedates of sale and price at which they were sold; and number of unitscurrently owned and the current value of those units. A participant mayacquire multiple lots in the same sub-fund of a fund, designated by thevariable q, where q ranges from 1 to Q. At any time, the sum of unitsand the sum of values of all lots in a sub-fund may describe aparticipant's total investment in that sub-fund, and the sum of valuesacross all sub-funds describes a participant's total investment in thatPRIA fund.

A Unit, U, with Asset Value, A, 108 is the most granular representationof ownership interest in a sub-fund by a participant. Specifically, thevariable U(p,q,f,g,t) is the most granular object defining the number ofunits owned by a participant, p, 110 through an investment lot, q, 112in sub-fund, g, 106 of a PRIA fund, f, 104 offered by an asset manager,m, 102, at time t, with an asset value of A(p,q,f,g,t). Embodiments ofthe present invention may generate and store ownership data thatidentifies ownership stake generated from the use of the investmentcontribution deposit for each participant in an investment vehicleavailable in the investment fund. Embodiments of the present inventionmay also implement a structure that governs the operation of ademographic return fund as part of the investment fund. Embodiments ofthe present invention may also generate and store additional ownershipdata that creates ownership in the demographic return fund as part ofthe investment fund, wherein the system is configured to create thedemographic return ownership units for each participant in theinvestment fund by a specific formula.

With these definitions of the primary objects of this invention, nextthe business systems, apparatus and media are described. The methods andcalculations embodied therein and utilizing the objects defined abovewill be described thereafter.

PRIA Processes and Systems.

The prior art consists of asset managers who offer conventionalinvestment funds, as described earlier in the Background. For thepurposes of describing the invention, it is assumed that one such assetmanager decides to offer a PRIA fund as well. It is therefore assumedthat the asset manager has all the methods, systems, apparatus and mediato implement the conventional investment fund offerings to investors,and that the PRIA fund method, system, apparatus and media are added asan “overlay” on to those. In this context, an overlay signifies aninnovation that is implemented as an addition that improves upon theprior art. An alternative embodiment would assume that the asset manageris new and, therefore, would have to build a completely new set ofmethod, system, apparatus and media to offer a PRIA fund to investors.In that case, there will be components that reflect the prior art ofoffering conventional investment funds and components that reflect theoverlay necessary to offer a PRIA fund.

FIG. 2 represents the process for an asset manager who wishes to offer aPRIA fund to its investors. The first step of the process is tocustomize the PRIA fund design 202. In this step, the asset managerwould use a PRIA Fund Design System represented in FIG. 4 to select PRIAfund features that would be of interest to its customers. These featuresrelate to the PRIA object attributes described earlier, as well as rulesthat an asset manager specifies for certain actions that a participantor the asset manager may take. For example, the asset manager canrequire minimum and maximum initial deposits, minimum and maximumsubsequent deposits, minimum and maximum early withdrawals, minimum andmaximum period before payouts commence, minimum and maximum period overwhich payouts are completed, minimum and maximum amount of scheduledpayouts, and formulae for Lower Asset Value (LAV) calculation.

The asset manager would establish launch criteria in order to offer aPRIA fund. Examples of such criteria are, the minimum expected amount ofdeposits over a defined time period, and the minimum number ofparticipants at launch. Once the PRIA fund design has been selected, theasset manager would check if its launch criteria have been met 204. Ifthey have not, the asset manager may choose to end the process or toredesign the PRIA fund features and try again. If the launch criteriahave been met, the asset manager would move to the next step andinitiate the PRIA fund launch process 206. A launch process would beconsistent with launch processes for other conventional investmentfunds. Examples of launch process steps include preparing theadministration system to track and report on all invested assets,recruiting and training marketing staff, preparing sales materials, andobtaining all internal and external approvals.

An asset manager may require a participant to specify a paymentschedule. The payment schedule may include defining a table of dates andunits to be sold (e.g., percentage of total, certain number of units, ora certain number of dollar-equivalents). For example, a payment schedulecould be a sale of 50% of units on Jun. 30, 2015, and the rest of theunits on Jun. 30, 2025. At the first date, the participant may concludethat they do not really need all of that money, so the participant mayprefer to take less, e.g. 30% of units. The participant could be forcedto take the full 50% and then they could deposit 20% back, which wouldbe treated as a new deposit. Alternatively, the asset manager may permitthe withdrawal of only 30%, and allow the individual to defer the saleof the remaining 20%. For the remaining 20%, there may be a variety ofchoices available to the participant. For example, the participant mayhave the option to take the 20% at any time in the future withoutpenalty or take the 20% at some specified dates in the future (i.e.,update the payment schedule) with the consequence that there may be apenalty on early withdrawal or upon death. Alternatively, if theparticipant wants to take out more than 50% on the first payment date,they may be able to but the excess may be treated as an earlywithdrawal.

A payment schedule may be modified from time to time as permitted by theasset manager or administrator. For example, every 5 years or once alarge deposit has been made or may be some other rule. This featurerecognizes that a participant's needs may change over time. However, theasset manager may not allow the participant to modify the paymentschedule at any time, since the participant may have the ability to makean early withdrawal without having to modify the schedule. The paymentschedule may also require a minimum period of time before any paymentscan be made to the participant. So even if the schedule may be modified,it may only apply after the payment schedule start date. The paymentschedule may also require a minimum number of scheduled payments. Forexample, the rules may specify that payments can be taken annually,quarterly, monthly or some other frequency allowed by the fund's rules.A participant may be given the option to take less than the scheduledpayment amount on any particular payment date. In that situation, thefund's rules would define how the difference between the scheduledamount and the amount actually paid out is treated. For example, thedifference could be withdrawn at full value by the participant at alater date after the scheduled payment date. Alternatively, thedifference may be deferred to other specified payment date(s), and anyearly withdrawals from those payment dates could be considered earlywithdrawals. A participant may be given the option to make a certainnumber of unscheduled withdrawals for a defined part of their holdingsat full value. For example, two unscheduled withdrawals, where eachwithdrawal is less than 10% of their full account value, may bewithdrawn at any time at full value. In this situation, otherunscheduled withdrawals would be paid out using the LAV. A participantmay be charged fees by the asset manager for some of the modificationsor unscheduled withdrawals described above, at the time such actions aretaken. It is understood by those of ordinary skill in the art that thesystem implements such features using interactive functionality such asby generating an interactive display resulting from signals (which canbe packets or messages) that are sent to mobile apps, browsers, or othersoftware on a client device. The interface in this case will allow therelevant interactivity that allows the client to, for example, modifythe schedule or percentages.

The asset manager may establish sales criteria in order to initiatestarting a PRIA fund and offering it to investors. Examples of salescriteria include recruiting a minimum number of sales outlets (e.g.,brokers and other intermediaries) to offer the fund, and obtaining aminimum level of investor interest in the fund, both in terms of thenumber of participants and the amounts to be invested. During the launchprocess, the asset manager may check if the sales criteria 208 have beenmet. If they have not, the asset manager can choose to end the processor go back and redesign the product. If the sales criteria have beenmet, the asset manager would move forward and start the PRIA fund 210.This entails putting all the components in place to start takingdeposits and to run and administer the PRIA fund.

Once the fund is started, the asset manager would operate the PRIA fund212. This may involve taking deposits, allocating those deposits intosub-funds as directed by each participant, crediting market returns fromthe growth of investments due to dividends, interest and market valuechanges, crediting demographic returns based on the demographicexperience of investors in that PRIA fund, deducting fees and expensecharges, and paying out proceeds from the sale of investments insub-funds as scheduled or as directed by investors either voluntarily(early withdrawal) or involuntarily (upon death). To administer the PRIAfund, the asset manager would use a PRIA Fund Administration Systemrepresented in FIG. 5.

The asset manager would have established a minimum threshold criteriaabove which the PRIA fund would continue to operate and below which thePRIA fund would be closed. Examples of such criteria are a minimumamount invested in the funds, a minimum number of participants in thefund and an acceptable level of inflows and outflows to and from thefund. The asset manager regularly monitors and checks if the operatingcriteria have been met 214. If the criteria are met, the asset managerwould continue to operate the PRIA fund. If the criteria have not beenmet, the asset manager would close the PRIA fund 216 by selling allremaining investments and paying out all remaining investors in a mannerestablished by contract (e.g., described in the PRIA fund prospectus oroffering document) at the inception of the PRIA fund.

FIG. 3 illustrates the process for a participant who invests in a PRIAfund. As a first step, an individual would receive information aboutinvesting in a PRIA fund 302 from various formal and informal sources,for example a Registered Investment Advisor (RIA), another investmentadvisor, an asset manager, a corporate retirement plan sponsor, theinternet, or other sales channels 304. Based on that information, theindividual can decide if they are interested in investing in the PRIAfund product 306. If they are not interested, they can stop the processthere. If they are interested, they can get further information andreview sales materials and illustrations 308. This review would be aidedby a PRIA Participant Sales System, illustrated in FIG. 6.

The individual would have developed some formal and informal investmentcriteria, which would be used as a basis for making a decision forinvesting in a PRIA fund. For example, the individual may have a targetamount of wealth that they would like to build over some defined period,and a minimum cash flow that they need to generate in their retirementyears. The individual would have to decide if their investment criteriaare met 310. If the investment criteria are not met, the individual canstop the process there. If the investment criteria are met, theindividual, or an investment intermediary acting on behalf of theindividual, will use the asset manager's administration systemillustrated in FIG. 5 to select the various fund options offered by theasset manager 312. Once the options are selected, the individual becomesa participant by making a deposit and investing in the PRIA fund 314. Inconjunction with making a deposit, the participant may also providepersonal information, such as name, address, demographics, or otherinformation. The system may also be configured to receive and store suchpersonal information. In alternative embodiments, an asset manager mayoffer alternative mechanisms for making an investment. For example, theindividual can fill in an application form and a deposit form manually,and an employee of the asset manager can manually process thatinformation. In all cases, an individual's application and depositinformation would be input ultimately into the asset manager'sadministration system illustrated in FIG. 5.

Next, the system may create an individual account for each participant,where the accounts may be available to be created in the same investmentfund for participants that are in multiple diverse classifications. Forexample, a female in her 30's with no history of smoking could be anexample of three different types of classifications: gender, age andhealth. An account creating interface may be utilized to allowparticipants to self-select a start date and payment schedule for aliquidation phase of their account. The self-select start date may beconfigured to begin immediately or at some time in the future. Thesystem may be configured to receive and store principal data thatidentifies one or more investment contribution deposits made by eachparticipant into the fund. Additional ownership data may be generatedand stored by creating ownership in the demographic fund as part of theinvestment fund. The system may be configured to create the demographicreturn ownership units for each participant in the investment fund by aspecified formula.

The participant would utilize the user interface of the asset manager'sadministration system to track their activities and the value of theirinvestments in the PRIA fund. The investment balance in the fund wouldbe calculated on a regular (e.g., daily) basis and would show, amongother information, the deposits that were invested, net of any sales,the market returns and demographic returns earned, and the fees charged316. The investor can check if the value of their investments ispositive 318. If the PRIA fund balance is not positive, then theparticipant has zero balance either through sale of investments orextraordinarily negative market returns, which terminates that PRIA fundparticipation.

If the PRIA fund balance is positive, the participant can decide whetherto take any further actions. If no action is taken, the participantsimply continues with their participation in the PRIA fund 322. If anaction is taken, then those would be one of two types. First, theinvestor can opt to make an additional deposit 324. In that case, theprocess would be the same as making an investment in a PRIA fund 314described earlier. Second, the investor can opt to sell investments 326.

A third action, transfer between sub-funds, is available to theparticipant but not reflected in FIG. 3, since it does not remove assetsfrom the PRIA fund, except for any fees that may be charged for thataction. Therefore, excluding any fees, there is no impact on the totalassets owned by the participant, including their units owned in the DRsub-fund, for such an action. In this embodiment, transfers in or out ofthe DR sub-fund are not allowed, since those units are earned over timeand cannot be purchased. In an alternative embodiment, the asset managercan set rules on transfers in or out of the DR fund, and possiblypurchases of units in the DR fund. The asset manager is likely to imposerules on transfers between funds, for example on the frequency oftransfers between funds over a certain period, or the amount of fundsthat can be transferred at any time.

On the sale of investments, specific units owned by the participant ineach of the sub-funds are sold at full value (i.e., at Net Asset Value,NAV). Before determining how much is actually paid to the participant onthat sale, the asset manager has to determine whether the sale is ascheduled sale 328 (i.e., for an amount from zero to the maximum amountspecified, and at a date contracted by the participant) or anunscheduled sale (i.e., either a voluntary withdrawal by theparticipant, or an involuntary withdrawal due to death of theparticipant). If it is a scheduled sale, then the participant receivesproceeds based on the full Net Asset Value of their investments 330,less any fees that the asset manager may impose at that stage. If it isnot a scheduled sale, then the proceeds would be based on a Lower AssetValue (LAV) as determined under the PRIA fund rules 332, also net of anyfees that the asset manager may impose at that stage. In that case, thedifference between the full asset value based on NAV and the lower valuebased on the LAV, defined as the Contribution to the Demographic Return334, is deposited by the asset manager back into the PRIA fund 314; theasset manager makes the investment into the DR sub-fund for the benefitof all remaining participants. In the event of a participant's death,the entire portfolio of PRIA fund holdings, including their share of theDR sub-fund, is sold. On the other hand, in the event of a partialwithdrawal, only the designated part of the PRIA fund holdings is sold,and the participant continues to be entitled to a proportionate share ofthe DR sub-fund based on their remaining investment holdings. A clientlife status interface may be implemented so that a participant's deathmay be reported to the system.

Computer-Implemented Software Systems.

Having described the major methods, systems and processes from theperspective of an asset manager and an individual participant, theenabling software systems mentioned earlier will now be described ingreater detail. There are three software systems that are describedindependently herein. The present invention is not limited to only threesoftware systems. There may be more systems that work together or thesystems may be combined and implemented together. Each can beimplemented as described or in alternative embodiments that deliveressentially the same functionality, information, calculations andreports. These alternative embodiments may combine some of the componentelements of the software systems or implement them as disaggregatedmodules.

The unique aspect about all three of these software systems is that theyembody the methods, processes, data requirements and calculationsrequired to implement any embodiment of the invention. Two of thesoftware systems use some simulated data in order to perform theirfunction, but the core PRIA data requirements and calculations areessentially the same for all three software systems. For the purposes ofexposition, the three software systems are described first, followed bya description of the PRIA data requirements and calculations that areembedded within each of them.

FIG. 4 describes the PRIA Fund Design System (FDS). The FDS is asoftware implemented system that is used by an asset manager in severalways to simulate the potential future evolution of a PRIA fund under avariety of scenarios and over a range of time horizons. The coreanalytics of the FDS is the Fund Design Simulation Model (FDSM) 402. TheFDSM is a computer-enabled software program that reads inputs providedby an asset manager and produces output displaying results of thesimulation. The calculations performed by the FDSM are described below.

There are three categories of inputs into the FDSM. The first is theFund Design Elements (FDE) 404, the second is the ProductionSpecifications (PS) 406 and the third is the Economic Scenario Generator(ESG) 408. There is one broad category of output, the Fund DesignSimulation Results (FDSR) 410, that displays all the results that anasset manager will use in making decisions about a PRIA fund.

The Fund Design Elements 404 has two core modules. The first is the PRIAFund Features (PFF) 414. This module enables an asset manager tocustomize a PRIA fund by selecting and specifying several alternativePRIA fund features that are available in the FDE 404. In its simplestembodiment, the PFF 414 provides a menu of choices for an asset managerto select from, and the asset manager can specify choices withinallowable ranges of values for these features. In another embodiment,the PFF 414 could also allow an asset manager to add new features andalso to add customized software code to the FDSM to capture suchfeatures. Examples of PFF are described above.

The second module of the FDE 404 is the Sub-fund Choices 414 module. Inthis module, an asset manager selects from a menu of sub-funds that itwants to include in the PRIA fund that will be offered to participants.The menu of sub-funds can include those investment choices that theasset manager has previously established, for example acurrently-offered mutual fund, or a new investment choice that it may beinterested in setting up, for example a mutual fund that has a newinvestment strategy. Upon selection of the sub-funds from the menu, thedata regarding the characteristics, historical performance of thosesub-fund, and drivers of future performance will be loaded from theasset manager's own database or a third-party database that offers suchinformation. If such data is not available from those sources, theSub-fund Choices 414 module can be implemented with those componentsstored and retrievable in that module using some combination ofhistorical data and simulated data.

The Production Specifications 406 has four core modules. The firstmodule is the Participant Population Attributes (PPA) 416. In thismodule, an asset manager inputs the attributes of the population ofpotential investors in the PRIA fund that is being designed. Theseattributes represent participants who join at the inception of the fundand those who join at later dates considered by the FDS 402. Theattributes are sufficiently well-defined to enable the asset manager toassess the simulation results as different attributes are tested. Theseattributes are a combination of the information that an individualparticipant would provide when making deposits in a PRIA fund and thedata necessary to simulate their demographic experience over time. In asimulation, these attributes can be applied at both an individual levelas well as at a cohort or population level. For example, participantmortality and withdrawal experience would be specified, most likely byreferring to actuarial tables for annuitants who are likely to exhibitsimilar demographic characteristics as PRIA fund participants. Thevolume of participants joining in each year of the simulation would bespecified, together with assumptions about age and gender distributions.

The second module of the PSS 406 is Production Variables (PV) 418. Inthis module, an asset manager can specify variables that define thebusiness of running a PRIA fund. Examples of such variables are thenumber of years that the fund would run, and the number of years to runthe simulation.

The third module of the PSS 406 is the Revenue and Expense Variables(REV) 420. In this module, an asset manager tracks its own revenues andexpenses as a result of offering the PRIA fund being designed. The assetmanager can include a full financial statement in the REV module orsimply track certain revenue and expense items, which would then be usedin other asset manager software applications to assess profitability ofthe PRIA fund business.

The fourth module of the PSS 406 is Probability Distributions (PD) 422.In this module, an asset manager can specify the probabilitydistributions for any parameters and variables that are subject todynamic simulations requiring such an input. For example, mortalitytables and withdrawal probability distributions would be used togenerate the level of persistency in the PRIA fund, i.e., the proportionof participants who continue to invest in the fund from one period tothe next.

The Economic Scenario Drivers (ESD) 408 is a module that specifies theeconomic conditions in simulated future scenarios and time horizons inwhich the PRIA fund being designed is tested. The prior art consists ofmany commercially available Economic Scenario Generators that can beused by a skilled practitioner to produce the data necessary for theESD. Simpler ESDs use deterministic scenario paths where economicparameters are specified explicitly and remain unchanged during thesimulation. More complex ESDs use economic parameters that are variableand path-dependent, and are recalculated at each period along a scenariopath. The economic parameters are also quite varied, and the assetmanager should choose an ESD that has a high degree of relevance to thesub-funds that they intend to offer.

Given the inputs from the FDE 404, PS 406 and ESD 408, the FDSM 402performs its calculations. The Fund Design System Reports FDSR 410produces the resulting output of the FDSM 402. The output is displayedon a computer screen, printed on paper or otherwise delivered to theasset manager using the FDS. All the components of the FDS are availableto an asset manager through an Asset Manager Applications Interface 424,through which a user can input data, run simulations, and retrieve andreview results.

The FDS can be used by an asset manager in several ways. For example,the asset manager can use it to create and test the design of a PRIAfund that they will ultimately offer to its customers. In anotherapplication, once a PRIA fund is launched, the asset manager can use theFDS to simulate the future performance of that fund under various futurescenarios and time horizons. The results of the simulation can be usedby the asset manager in several ways, for example, for internal expensebudgeting purposes and for its own corporate financial projections. In athird application, also once a PRIA fund is launched, the FDS can beused by the asset manager to evaluate and decide on actions that theymay be able to take to modify some of the features of the PRIA fund, asallowed by the PRIA fund rules. For example, the FDS can help assess theimpact of replacing one sub-fund choice with another sub-fund choice.

FIG. 5 describes the PRIA Fund Administration System (FAS). The FASdescribes a computer-based software system that an asset manager wouldimplement to sell and administer any PRIA fund that it offers toparticipants. The FAS consists of the Asset Manager AdministrationSystem (AMAS) 502 and the PRIA Overlay System (POS) 504.

In some embodiments, a newly-invented PRIA Overlay System (POS) 504 isimplemented as an overlay that is integrated in parts or as a whole withthe AMAS 502. FIG. 5 illustrates a configuration 506 where the entirePOS 504 sits within the Security, Privacy and Firewall 516 environmentof the AMAS 502, and there are multiple interfaces between them. Otherconfigurations are possible that achieve the same function of thepreferred embodiment, for example where none or only certain parts ofthe POS 504 sit within the AMAS 502 environment, with the appropriatesecurity, privacy and firewall considerations installed. Suchalternative configurations and computer systems that achieve the samefunctionality should be considered within the scope of this invention.

The AMAS 502 consists of several media, modules and interfaces. A DataWarehouse 508 contains all the static and dynamic data that is requiredto appropriately administer an asset manager's operations. The DataIntegration and Data Access Components 510 is the module that controlsthe input and output into the Data Warehouse 508, whether that data issourced within the asset manager's own environment, i.e., AMAS 502, orfrom external sources. Within the asset manager's business environment,several Asset Manager Applications for Front, Middle and Back Office 514are available to users to manage all its day-to-day operations. Theseapplications access information stored in the asset manager's DataWarehouse 508 via the Synchronous and Asynchronous Business Logic 512that manages such communication through business rules (describingspecific procedures) and workflows (containing the tasks, proceduralsteps, required input and output, and the tools needed in each step).The Data Warehouse 508 may provide the functionality to receive andstore personal information about the participants, principal data,ownership data and any other relevant data that needs to be stored andretrieved.

The PRIA Overlay System 504 contains all the data, business logic andapplications that, together with the data and applications provided bythe AMAS 502, uniquely facilitates and enables the day-to-dayadministration of a PRIA fund, specifically by performing thecalculations related to participant actions, DR sub-fund dynamics andother demographic-related data. The POS 504 has a similar structure tothe AMAS 502. The POS Data Warehouse 518 contains all the static anddynamic data required to appropriately manage a PRIA fund. The POS DataIntegration and Access 520 module controls the input and output into thePOS Data Warehouse 518. The PRIA Business Logic 522 manages thecommunication and business rules between the PRIA Applications 524 andthe Data Warehouse 518. The PRIA Applications 524 performs the PRIA fundcalculations and provides information to the asset manager that can beused for both internal and external communications and reporting, thatwill be described later in this document.

The POS 504 may be configured to provide an interactive application thatprocesses a structure for the operation of the investment fund, whichincludes handling interactions with potential participants, participantsand administrators. The POS 504 may also be configured to registerparticipants in the fund, receive and store personal information aboutthe participants and create individual accounts for the participants.Further, the POS 504 may also be configured to provide an accountcreation interface, receive and store principal data and ownership data.Also, the POS 504 may be configured to implement the structure thatgoverns the operation of the demographic return fund. The POS 504 mayalso provide an account value interface through which the computersystem interacts with other computer systems to receive and provideinformation about the current value to fund participants. The currentvalue may contain a current value of the investment contribution of thatparticipant in the investment vehicle incorporating market returns and acurrent value of the demographic return ownership units of thatparticipant. The POS 504 may also provide a client life status interfaceso that a participant's death may be reported to the system.

There may be several interfaces between the AMAS 502 and the POS 504, assignified by the arrows that connect the Applications (514 and 524),Business Logic (512 and 522) and Data Integration and Access (510 and520) modules in FIG. 5. One or more designated Users 526 in either orboth of the AMAS and the POS systems are given access to the PRIAfund-related modules and applications so that they can appropriatelymanage the administration of a PRIA fund.

Outside the Security, Privacy, Firewall 516, the asset manager'sParticipant Applications Portal (PAP) 528 will facilitate communicationwith participants via the internet (web), mobile, messaging and othersoftware applications technology 530. The PAP 528 may also be referredto as the interactive application, which also may include the accountcreation interface, the account value interface, a withdrawal interface,a client life status interface, a demographic return account valueinterface. The PAP 528 is part of both A MAS 502 and POS 504 since ithas both conventional investment management applications as well as PRIAfund management applications. It is the interface through which anindividual participant and/or their designated financial representativecan initiate participation in a PRIA fund, monitor their investmentprofile and performance at any time, communicate electronically with theasset manager, and perform any calculations that the asset manager makesavailable through that portal.

As indicated above, alternative configurations and computer systems thatachieve the same functionality should be considered within the scope ofthis invention. For example, in an alternative embodiment, the PRIA FundAdministration System is designed so that the functionality of the PRIAOverlay System 504 is fully contained and integrated within the AssetManager Administration System 502. There would be one Data Warehouse 508that includes all the data fields and relationships in the POS DataWarehouse 518; one Data Integration and Data Access Component 510 thatincludes all the functionality and components of the POS DataIntegration and Access 520; one Synchronous and Asynchronous BusinessLogic 512 that includes all the functionality and elements of PRIABusiness Logic 522; and one Asset Manager Applications 514 that includesall the functionality, programs, interfaces and relationships of PRIAApplications 524. Other embodiments could have some components fullyintegrated as just described, while others components are modularized asreflected in FIG. 5.

FIG. 6 illustrates a PRIA Participant Sales System (PSS). The diagramshows an embodiment of a Sales Applications Portal (SAP) 606, aweb-based computer-implemented software interface, that a potentialparticipant 602 would use to learn about and ultimately decide whetheror not to invest in a PRIA fund. The same Sales Applications Portal 606,or a customized version, would also be used by their Financial Advisor604. As noted earlier, the Financial Advisor 604 is meant to signify anyintermediary through which the potential participant learns about a PRIAfund investment, for example a Registered Investment Advisor, or acorporate retirement plan sponsor.

The Sales Applications Portal 606 can have several modules that help thepotential participant 602 learn about the PRIA fund product, showillustrations about how the product works, and compare it to otherproducts. In the illustrated embodiment, three modules are shown that dothis, although other modules can be added to alternative embodimentsthat show essentially the same information to the potential participant.

The first module is the PRIA Education Module 608. This module providesa description of the PRIA fund product and its various features, and howit fits within an investor's financial planning portfolio. The secondmodule, the PRIA Illustration Module (PIM) 612, described below, is usedto show a potential participant 602 the risks and rewards of investingin a PRIA fund based on specific inputs by that individual. The thirdmodule is the Product Comparison Module 610 that enables a potentialparticipant 602 to compare various PRIA funds and other investmentchoices in general descriptive terms or with detailed numericalanalysis.

The PIM 612 enables a potential participant to input some informationand run a simulation program that produces output that they can use toillustrate the economics of investing in a PRIA fund. The core softwareprocess of the PIM 612 is the Illustration Simulator (IS) 624. The ISreads input provided by the potential participant 602 or their financialadvisor 604, loads parameters from the Illustration Module Database 622,and generates results that are displayed on the Sales ApplicationsPortal 606 computer screen.

There are four steps that a participant or financial advisor may take toinput data to the IS. First is to Input Participant Data 614. Althoughthe asset manager will need some personal data (e.g., social securitynumber, date of birth) as a matter of course for opening an investmentaccount, the PRIA fund itself does not need such personal data. The datathat the individual provides would include the amount to be investedinitially and in later periods, the number of years before scheduledpayouts commence, the number of years that scheduled payouts are needed,minimum and maximum range of payout amounts. Next the user selectsinvestment choices 616, i.e., the sub-funds they are likely to investin, if they participate in a PRIA fund. The third step is to selectother optional PRIA fund features offered by the asset manager. Thefourth step is to select illustration assumptions necessary to run thesimulation. For example, the individual could have an option to selectfrom a menu of choices, the economic environment that would be in placeover the simulation period, such as high growth, low growth, inflation,and market shock scenarios.

When a user 602 or 604 starts the IS 624, the IS reads any datanecessary to perform the calculations that is stored in the IllustrationModule Database 622. The type of data and calculations required aredescribed later in this document. The database would be populated bydata provided by one or more Asset Manager Sales Systems 626, and otherexternal sources of financial data.

Although FIG. 6 does not explicitly show an interface between the SalesApplication Portal 606 and the Participant Applications Portal (PAP) 528described above, such a link is envisaged to be provided as a seamlesslink between the two. This link is shown explicitly in FIG. 7 as P-Link726.

FIG. 7 shows the three software systems described above, FDS 706, FAS716 and PSS 714. The Asset Manager's Applications 702 for the FDS 706and the FAS 716 include the Asset Manager Applications Interface 424 forthe Fund Design System Model 402 illustrated in FIG. 4, and the AssetManager Applications for Front, Middle and Back Office 514 and PRIAApplications 524 illustrated in FIG. 5. The Participant Applications 704for the FAS 716 and the PSS 708 include the Participant ApplicationsPortal 528 illustrated in FIG. 5 and the Sales Applications Portal 606illustrated in FIG. 6.

Simulation FDS Data 718 is used for running the software programs in theFDS. Simulation PSS Data 720 is used for running the software programsin the PSS. Once a PRIA fund is set up and operational, both theparticipant and asset manager would be using Real FAS Data 722 for thequeries and programs that are run in the FAS 710.

An asset manager may use an M-Link 724 from the FDS 706 simply to accessthe FAS 710. A more integrated embodiment can include applications thatshare data and analytics seamlessly between the two. Similarly, aparticipant may use a P-Link 726 from the PSS 708 simply to access theFAS 710, and a more integrated embodiment can include applications thatshare data and analytics seamlessly between the two.

Each of these three software systems contains a PRIA Processor, 712,714, 716 that is essentially the same set of calculations required totrack the creation, dynamics and on-going management of a PRIA fund, andcustomized to produce the information required by the asset manager orparticipant using those software systems.

The following describes the details of the PRIA Processor, as applied tothe PRIA Fund Administration System (FAS) 716, recognizing that the samecore calculations are made in the FDS 712 and the PSS 714.

PRIA Data Requirements and Calculations.

Referring to FIG. 1, the main objects of a PRIA fund were describedabove. Specifically, a Unit, U, with Asset Value, A, 108 is the mostgranular representation of ownership interest in a sub-fund by aparticipant, and the variable U(p,q,f,g,t) is the most granular objectdefining the number of units owned by a participant, p, 110 through aninvestment lot, q, 112 in sub-fund, g, 106 of a PRIA fund, f, 104offered by an asset manager, m, 102, at time t, with an asset value ofA(p,q,f,g,t).

Static Attributes

Each of the objects defined above possess static attributes that do notchange over time and dynamic attributes that are changeable. Thefollowing describe some of the static attributes in the preferredembodiment. Other attributes may be added depending on the particularembodiment of the invention that is implemented, or the particularsoftware system as illustrated in FIG. 7.

Each Participant has the following attributes:

-   -   a. A unique participant identifier or number, p that identifies        an individual investor for an asset manager. (At this point an        individual's account is tracked only within one asset manager's        PRIA funds; an individual's accounts across multiple asset        managers are not tracked, although that can also be        incorporated.)    -   b. A secondary participant identifier to act as a check to        ensure proper tracking of data. An example would be date of        birth. Alternative secondary identifiers besides date of birth        are also possible. The PRIA Overlay System POS 504 does not        require private information such as name, gender, social        security or similar number, maintained by the asset manager's        conventional asset management system AMAS 502.    -   c. An investment record that is a data matrix of all investments        made by a participant in fund f, showing lots purchased in each        sub-fund g, dates of those purchases, deposits made and units        purchased. (Dynamic data fields are included for participant        events such as withdrawals and additional deposits, and will be        updated whenever such an event occurs.)    -   d. The date of first investment in the PRIA fund is a timestamp        which can be used for various payout calculations.    -   e. The payout start date, b, is the date selected by the        participant from which scheduled sales from the PRIA fund        commence, and the net proceeds are paid to the participant.    -   f. The payout end date, e, is the date on which sales and        payouts from the PRIA fund are scheduled to end. With some        embodiments, this date is not required. For example if a        participant elects to sell sufficient assets to meet a certain        targeted dollar amount of proceeds, then the payout end date is        not easily specified, even though an end date will inevitably        occur.    -   g. A payout vector, V, that defines the schedule for selling        investments from the payout start date, b. One component of the        vector is a series listing the participant's scheduled payout        dates. Another component of the vector is a data field        associated with each payout date that specifies the proportion        of units to be sold, or the proceeds required from sales, or        some other formula that determines the amount of investments to        be sold. This payout vector may be modified and updated at        various points in time, depending on the fund rules established        by the asset manager.        Each Lot has the following attributes:    -   a. A unique Lot identifier, q, that identifies a purchase of        units in a sub-fund of a fund    -   b. A Participant identifier to register which participant, p,        owns the lot    -   c. A fund identifier to register the fund, f, that governs the        sub-fund in which an investment is made    -   d. A Sub-fund identifier to register the sub-fund, g, in which        an investment is made    -   e. The purchase date, d, on which lot was purchased    -   f. The amount of assets invested, A, in sub-fund g, updated for        any voluntary withdrawals or scheduled payouts    -   g. The number of units purchased, U, in sub-fund g, updated for        any voluntary withdrawals or scheduled payouts        Each Fund has the following attributes:    -   a. A unique Fund identifier label, f that identifies a specific        PRIA fund    -   b. A Sub-fund list that identifies which sub-funds are offered        under the fund    -   c. A Participant list that identifies which participants invest        in the fund    -   d. A set of Fund rules that specify all the processes for        various participant and fund dynamics. Among these rules will be        those that govern the determination of Lower Asset Values (LAV)        on early voluntary withdrawals or on death, and the        determination of Demographic Returns (DR) and the allocation of        each period's Contribution to Demographic Returns (CDR) to each        participant.    -   e. A set of Fund rules that specify the processes for charging        Fund fees to participants.        Each Sub-fund has the following attributes:    -   a. A unique Sub-fund identifier label, g, that identifies a        specific investment choice for participants    -   b. A Fund list that identifies which PRIA funds offer this        sub-fund as an investment choice    -   c. A Participant list that identifies which participants invest        in the sub-fund    -   d. A set of Sub-fund rules that specify the processes for        charging sub-Fund fees to participants        Dynamic Attributes

In order to consider the dynamic attributes of PRIA fund objects, thetime steps for calculations need to be specified. As a generalproposition, the calculations set forth below can work for any requiredtime step, with parameters appropriately calibrated for that interval.For the PRIA Fund Administration System (FAS) 716, daily time steps willbe required since NAV calculations are typically updated daily. For thePRIA Fund Development System (FDS) 712, where an asset manager issimulating PRIA fund performance over many years, annual time stepswould be reasonable. Similarly for the PRIA Participant Sales System(PSS) 714, where a participant is assessing a long-range investmenthorizon, annual time steps would also be appropriate. These systems willincorporate any day count convention that is consistent with businesspractice.

All valuations may be done at the end of a business day and available atthe start of the following business day. The calculations may also bedone within any time period that makes sense. All sales of units forwithdrawals are executed at prices on order day close. All purchases ofunits for new deposits are made at prices on order day close. (Otherembodiments can implement different rules for valuations and executionprices on sales and purchases.)

In the description below, the following notation convention is followed.All values and shares/units are calculated at start and end points ofthe interval. Using the generic variable name, ValueName, for a variablethat is to be valued at each calculation time, the notation isValueName(, . . . , t−1) for the variable's starting value at time(t−1), and ValueName(, . . . , t) for the variable's ending value attime t. Similarly, using the generic name, FlowName, for all variablessignifying flows during the interval (t−1) to t, the notation for allflows in the interval is FlowName(, . . . t)

FIG. 8 illustrates the calculations and data flows to be performed ateach time step. The data flows from the asset manager's administrationsystem 802 (which is the same system labeled as 502) to the PRIA overlaysystem (which is the same system labeled as 504) and is sent back to theasset manager's administration system 806 (which is the same systemlabeled as 502).

The sequence of calculations from time step (t−1) to t is summarized asfollows:

-   1. Initialize starting values at time (t−1) 808.    -   a. This is the same as the ending values for the interval (t−2)        to (t−1).    -   b. By definition, all calculations for a fund, f, start at its        inception at time 0-   2. Track all participant actions and flows in the interval (t−1) to    t 810.    -   a. Track Early Withdrawals due to voluntary elections    -   b. Track Early Withdrawals due to death    -   c. Track Scheduled Payouts under participant's previous election    -   d. Track New Deposits by current and new participants-   3. Track all fund actions and flows in the interval (t−1) to t 812.    -   a. Track all investment earnings on assets    -   b. Track expenses charged at sub-fund level    -   c. Track expenses charged at fund level    -   d. Track Contribution to Demographic Returns (CDR)-   4. Add and subtract flows to update ending values at time t 814.    -   a. Reduce assets and shares/units for Early Withdrawals due to        voluntary elections    -   b. Reduce assets and shares/units for Early Withdrawals due to        death    -   c. Reduce assets and shares/units for Scheduled Payouts    -   d. Increase assets and units in DR sub-fund for Contribution to        Demographic Returns (CDR)    -   e. Increase assets and shares/units for New Deposits from        current and new participants    -   f. Increase assets and sub-fund NAV for asset earnings net of        sub-fund manager expenses    -   g. Reduce assets for expenses charged at sub-fund level    -   h. Reduce assets for expenses charged at the fund level

When applying these steps with the PRIA Fund Administration System (FAS)710, real data is used. When applying these steps with either the PRIAFund Development System (FDS) 706 or the PRIA Participant Sales System(PSS) 708, real data would not be available for all data fields, andsimulation data would be used instead, as indicated in FIG. 7.

The details of each of the calculations at each time step are describedbelow.

Starting Values at Time (t−1)

At the most granular level, an individual p owns a lot q in a sub-fund gof fund f. Asset values and number of units are available from the assetmanager. Similarly sub-fund net asset values (NAV) would be available.The PRIA overlay system 504 would retrieve that information from theasset manager administration system 502 and perform the calculations andchecks below.

There are several choices when aggregating from the most granular levelto the fund level. In the list below, aggregation perspectives aretagged as P for participant's perspective, G for sub-fund's perspective,and F for fund's perspective. If an asset manager offers several funds,f, then an individual participant, p, would be able to aggregate overall the investments in all those funds. Similarly, the asset manager, M,would be able to track all the assets held in PRIA funds. Therefore theasset manager's perspective is included in the aggregation calculations.For example, the tag (P, F) signifies values from the perspective ofboth a participant (P) and a Fund (F).

Checks for consistency are used to ensure that the same values areproduced when successive aggregation follows a different path.

Note that the aggregation of sub-funds includes the DR sub-fund. Themechanics of the DR sub-fund will be described in greater detail below.

First sum all variables from participant's perspective up to fund level:

-   1. (P,G,F) For participant p's lot q in fund f's sub-fund g:    -   a. Assets in g: A(p,q,f,g,t−1)    -   b. Units in g: U(p,q,f,g,t−1)    -   c. Check: A(p,q,f,g,t−1)=NAV(f,g,t−1)×U(p,q,f,g,t−1)    -   d. This information is available from asset manager.-   2. (P,G,F) For participant and fund perspectives, sum over all lots    q to give participant p's investment in fund f's sub-fund g:    -   a. Assets in g: A(p,f,g,t−1)=Σ₁ ^(Q) A(p,q,f,g,t−1)    -   b. Units in g: U(p,f,g,t−1)=Σ₁ ^(Q) U(p,q,f,g,t−1)    -   c. Check: A(p,f,g,t−1)=NAV(f,g,t−1)×U(p,f,g,t−1)-   3. (P,F) Sum over all sub-funds g to give participant p's total    investment in fund f    -   a. Assets in f: A(p,f,t−1)=Σ₁ ^(G) A(p,f,g,t−1)=Σ₁ ^(G)Σ₁ ^(Q)        A(p,q,f,g,t−1)    -   b. Shares in f: S(p,f,t−1)=A(p,f,t−1)×S(f,t−1)÷A(f,t−1)    -   c. Check: A(p,f,t−1)=S(p,f,t−1)×SAV(f,t−1)    -   d. It is meaningless to aggregate units in g over all sub-funds,        so that summation is not performed.    -   e. A participant only buys units in sub-funds and not shares in        a PRIA fund. The shares, S, in fare a means to signify the        proportion of total fund f assets owned by participant p, and        may be used to perform calculations that require this as an        input. Similarly, the value of a participant's total investment        in a PRIA fund is denoted by Share Asset Value, SAV. The SAV is        a calculation device and does not represent a purchase of        investments by a participant at that price per share.    -   f. Full or partial withdrawal payment is based on Lower Asset        Value, LAV for participant p's lot q, in fund f's sub-fund g,        which can vary by the cause, c, for the withdrawal. The simplest        causes for early withdrawal are voluntary full or partial        withdrawal, c=w, or full withdrawal on death, c=d.        -   i. The LAV design is a key component of the PRIA product and            the basis on which Demographic Returns (DR) are generated at            every time step.        -   ii. The LAV should be designed to deliver a PRIA product            that is attractive to participants, specifically those who            want to save for the long-term but are also interested in            maintaining control of their investment choices, including            their ability to withdraw funds on demand. The trade-off            that the asset manager has to consider is whether to provide            a higher payout on withdrawal, or a larger payout stream in            retirement. A higher LAV (and the closer it is to the NAV)            results in a larger early withdrawal payout, but a smaller            amount that would be contributed to the DR sub-fund, making            the product less attractive to long-term savers who stay            through retirement. On the other hand, a lower LAV schedule            would reduce the payout on withdrawal, while increasing the            DR that is generated, thereby leading to a higher payout            stream during retirement. A lower LAV schedule could            encourage participants to defer making deposits into a PRIA            fund until they are confident they would not need an early            withdrawal. This is illustrated in FIG. 9 in which growth in            the value of invested assets is graphed over time (not drawn            to scale). The scheduled payout amount, based on the NAV of            all funds including the DR-sub-fund, is reflected in the            top-most line 902. An equivalent non-PRIA fund value, based            on the NAV of all sub-funds excluding the DR sub-fund, is            reflected in the middle line, 904. The withdrawal amount,            based on the LAV of all funds including or excluding the DR            sub-fund as determined by fund rules, is reflected in the            bottom-most line 906. If the LAV is increased so that it is            closer to NAV, then both lines 902 and 906 would be closer            to line 904, and vice versa.        -   iii. LAV(p,q,f,g,t|c) is set by fund f's formula and depends            on p's history in the fund and will most likely be specified            at the lot level; see Participant actions and flows section            below for more detail.        -   iv. Withdrawal Proceeds for reason c on full liquidation is:            WP(p,q,f,g,t|c)=U(p,q,f,g,t−1)×LAV(p,q,f,g,t|c)        -   v. On partial withdrawal, fund rules would dictate which            specific assets could be sold. For example, all sub-fund            units could be sold proportionately, or units in specific            sub-funds could be sold at the participant's discretion. An            equitable fund rule would require all DR sub-fund units to            be sold in proportion to the full withdrawal request by the            participant, with sale of the other sub-fund units to follow            a fund-specified formula or a participant-directed            allocation. Although DR sub-fund units would be sold            proportionately on any partial withdrawal, the participant            would get additional units of the DR sub-fund reflecting the            invested assets still remaining in fund, f        -   vi. In this embodiment, values of all participant flows such            as withdrawals and deposits are calculated using LAV and NAV            values at the end of the period, i.e., at t. An alternative            embodiment would calculate these values using LAV and NAV            values another point in time, for instance at the start of            the period, i.e., at (t−1). All the calculations illustrated            herein would be modified accordingly. For instance, the            Withdrawal Proceeds equation shown above would be modified            to:            WP(p,q,f,g,t|c)=U(p,q,f,g,t−1)×LAV(p,q,f,g,t−1|c)-   4. (F) Sum over all participants p to give total investment in fund    f:    -   a. Assets in f: A(f,t−1)=Σ₁ ^(P) A(p,f,t−1)=Σ₁ ^(p)Σ₁ ^(G)Σ₁        ^(Q) A(p,q,f,g,t−1)    -   b. Shares in f: S(f,t−1)=Σ₁ ^(P) S(p,f,t−1)    -   c. Check: A(f,t−1)=S(f,t−1)×SAV(f,t−1)        Next, aggregate from a sub-fund's perspective up to the fund        level. The starting point is the same as in the first two        bullets 1 and 2 above, so those are not repeated here.-   5. (G,F) Sum over all participants p to give total investment in    fund f's sub-fund g:    -   a. Assets in f: A(f,g,t−1)=Σ₁ ^(P) A(p,f,g,t−1)=Σ₁ ^(p)Σ₁ ^(Q)        A(p,q,f,g,t−1)    -   b. Units in g: U(f,g,t−1)=Σ₁ ^(P) U(p,f,g,t−1)=Σ₁ ^(P)Σ₁ ^(Q)        U(p,q,f,g,t−1)    -   c. Check: A(f,g,t−1)=NAV(f,g,t−1)×U(f,g,t−1)-   6. (F) Sum over all sub-funds g to give total investment in fund f:    -   a. Assets in f: A(f,t−1)=Σ₁ ^(G) A(f,g,t−1)=Σ₁ ^(G)Σ₁ ^(P)Σ₁        ^(Q) A(p,q,f,g,t−1)    -   b. Check: A(f,t−1) is the same value as calculated in bullet 4        above    -   c. Units are not aggregated since that is meaningless        Next, aggregate up to the asset manager level.-   7. (P,M) Sum over all funds f to give participant p's total    investment in asset manager M's PRIA funds:    -   a. Assets in M: A(p,t−1)=Σ₁ ^(F) A(p,f,t−1)=Σ₁ ^(F)Σ₁ ^(G)Σ₁        ^(Q) A(p,q,f,g,t−1)    -   b. Shares in f are not aggregated since that is meaningless-   8. (M) Sum over all funds f and participant p to give the total    assets in M's PRIA funds:    -   a. Assets in M: A(t−1)=Σ₁ ^(P) A(p,t−1)=Σ₁ ^(P)Σ₁ ^(F)Σ₁ ^(G)Σ₁        ^(Q) A(p,q,f,g,t−1)    -   b. Check: A(t−1)=Σ₁ ^(F) A(f,t−1) which sums the assets        calculated in bullet 6 above.        In addition to these starting values, the following per unit or        per share values would also be available or calculated at this        stage:-   9. Net asset value, NAV, of sub-fund, g:    -   a. The NAV of all sub-funds, including the DR sub-fund, grows        only with investment returns of the sub-fund, net of expenses        charged at the sub-fund level and not already included in the        investment return calculation.    -   b. A sub-fund can be earmarked for single use with a single PRIA        fund only. Alternatively, it can be a multi-use sub-fund as        illustrated in FIG. 10, by offering different series of units        for each distinct type of investor in that sub-fund. In that        case, one series can be used as an investment choice for PRIA        fund, f, 1002, another series used for another PRIA fund 1004,        and different series used for other investment programs 1006        offered by the asset manager, whether those are other PRIA        funds, or not, e.g., a variable annuity fund 1008. In a        multi-use sub-fund, features such as investment strategy and        portfolio manager are the same across all series, while other        features such as expenses, minimum and maximum investment        amounts, can differ by series. Since the multi-use sub-fund is        the general case and the single-use sub-fund is a special case        of that, the calculations assume that a multi-use sub-fund is        being used.    -   c. For a multi-use sub-fund, g, NAV is calculated for the series        of units offered under fund, f. If all series have identical        terms, then in that special case, the NAV is the same for all        series, i.e. NAV(f,g,t−1)=NAV(g,t−1)    -   d. For a multi-use sub-fund, the NAV for the sub-fund series        appropriate for the fund, f, is.        -   NAV(f,g,t−1)    -   e. The asset manager would calculate the NAV by dividing the        total amount invested in the series for the sub-fund by the        total number of units in the series for that sub-fund    -   f. This calculation can be verified at any more granular level        within the sub-fund, e.g., the check in the line below uses the        NAV to check that the calculated asset value equals the value        reported by the asset manager    -   g. Check asset values:        A(p,q,f,g,t−1)=U(p,q,f,g,t−1)×NAV(f,g,t−1)    -   h. As noted earlier, the sub-funds can be any investment        instruments that the asset manager is able and willing to offer        its investors. If a sub-fund is also a managed investment fund        such as a mutual fund, it need not be offered or managed by the        same asset manager that offers the PRIA fund. For instance, if        fund manager ABC offers a PRIA fund to its investors, then that        PRIA fund can make available sub-funds offered by other asset        managers, for example mutual funds managed by fund manager XYZ.-   10. Share asset value, SAV of fund, f:    -   a. The number of shares, S, and the SAV are both devices to        create a similar set of metrics at the fund f level as the units        and NAV provide at the sub-fund level. The participant always        purchases units in a sub-fund and never purchases shares in the        fund. (Alternative embodiments can include the ability for        investments to be made directly at the fund level as well.)        Nevertheless, while it is accurate for a participant to consider        a deposit into the fund f as a deposit into an account through        which purchases of units in specific sub-funds are made, it may        be convenient for both the participant and the asset manager to        use the SAV and the share S as a way to understand how the        overall investment is growing over time. The SAV works in the        same way as NAV does for a sub-fund. At inception of a fund, its        SAV is $1 since every dollar invested purchases one share. The        SAV grows with net investment returns earned in the sub-funds        and with the growth of Demographic Return (DR) sub-fund, net of        expenses charged at the fund level, if any.    -   b. For a participant p, the total assets invested across all        sub-funds equals the number of shares in the sub-fund valued at        the SAV:        A(p,f,t−1)=S(p,f,t−1)×SAV(f,t−1)    -   c. A participant's number of shares S(p,f,t−1) fluctuates with        the proportion of the fund's assets owned by the participant        -   i. Since the shares are not purchased, they may not grow and            fall in tandem with the participant's deposits and            withdrawals. Instead a participant's share will be            influenced by the deposits and withdrawals of all            participants in the same fund.        -   ii. The participant's investment value A(p,f,t−1) will grow            and fall in tandem with the participant's deposits and            withdrawals since that is a reflection of the invested            assets in the underlying sub-funds

${S( {p,f,{t - 1}} )} = {\frac{A( {p,f,{t - 1}} )}{A( {f,{t - 1}} )} \times {S( {f,{t - 1}} )}}$

-   -   d. Check: For the whole fund f asset value equals total shares        valued at SAV:        A(f,t−1)=S(f,t−1)×SAV(f,t−1)        Participant Actions and Flows During Interval (t−1) to t

Each participant can take a number of actions that will impact values atthe end of the period. A participant can withdraw from the PRIA fundearly before one or more scheduled payout dates, whether involuntarilyon death or voluntarily for some other reason, or they can receive apayout on a scheduled date, or they can make additional deposits. A newinvestor can also join the fund in the interval. All these actionsresult in net flows out the fund or into the fund. In addition,investors can reallocate their holdings between sub-funds, which wouldnot change their total investment in the fund, except for any fees thatthe asset manager may impose for such a transfer. The calculations foreach of these actions are described below.

Any number of participant actions can occur in any time interval. Forsimulation applications that consider time periods longer than a singlebusiness day, for example, multiple actions can occur during such aninterval. For a smaller interval such as a business day, only onewithdrawal and one deposit action may be reasonable.

There are other practical limitations that are imposed to ensure logicalconsistency in the calculations, and these will require the assetmanager to set up rules to ensure that the participant actions aretreated appropriately. For example, if a partial or full voluntarywithdrawal is made during the same time interval that a new deposit ismade, the fund rules will determine whether those are to be treated astwo separate and independent transactions or if they are to be netted,resulting in either a new deposit or a partial withdrawal. In anotherexample, if a partial withdrawal election is made in the same timeperiod during which the participant dies, then the fund rules willdetermine if those are to be considered as a single withdrawal action ortwo, and whether the payout would be based on the NAV or LAV, or a blendof both.

The following describes the calculations for each of the participantactions:

-   1. Early withdrawal due to death, c=d:    -   a. The participant's account is closed on death and proceeds are        paid to beneficiaries. This is consistent with the treatment of        accounts in conventional investment funds.    -   b. All units in the sub-funds are sold at the closing NAV and        the total proceeds from the sales is DA(p,f,t), after deducting        any sub-fund fees at that stage, where        DA(p,f,t)=A(p,f,t)    -   c. The amount payable to the beneficiaries is based on assets        accumulated at periodic lower investment return over the        investment period for each lot. The accumulated lower return is        defined as the LAV. Note that the LAV operates in the same        manner as the NAV and SAV, so it is a value specified at the end        of a period, in this case at t.    -   d. Instead of the periodic actual asset growth of ΔA(p,q,f,g,t)        in each period since inception, the starting asset would be        credited with a lower asset growth in that period and all        periods prior to withdrawal. The LAV then signifies the        compounded return over time for the assets, net of prior        withdrawals, associated with that lot. Summing over all lots q        over all sub-funds g, this payout amount would then be written        as:        DP(p,f,t|d)=Σ₁ ^(G)Σ₁ ^(Q) U(p,q,f,g,t−1)×LAV(p,q,f,g,t|d)    -   e. Although the LAVs cannot strictly be summed, as a short-hand        and to signify that the participant's shares in fund fare sold        at a lower rate, this can be written as:        DP(p,f,t|d)=S(p,f,t)×LAV(p,f,t|d)    -   f. The difference between the 2 values is the Contribution to        the DR (CDR) assets due to this event, i.e.        CDR(p,f,t)=DA(p,f,t)−DP(p,f,t|d)    -   g. In summary, the changes in assets and units are as follows:        -   i. Lots sold: DU(p,q,f,g,t)=U(p,q,f,g,t−1)        -   ii. Assets sold: DA(p,q,f,g,t)=A(p,q,f,g,t)        -   iii. Summing across all lots and sub-funds, total assets            sold by the participant is: DA(p,f,t)=Σ₁ ^(G)Σ₁            ^(Q)WA(p,q,f,g,t)        -   iv. Check: DA(p,f,t)=A(p,f,t)        -   v. Amount paid on withdrawal is DP(p,f,t|d)        -   vi. The difference between the assets sold and the amount            paid to beneficiaries is the contribution to the DR due to            this event, i.e.            CDR(p,f,t)=DA(p,f,t)−DP(p,f,t|d)-   2. Voluntary early withdrawal, c=w:    -   a. In general, there can be several reasons or causes, c,        allowed by an asset manager for voluntary withdrawal, each of        which may be treated differently in the parameters for the        calculations, although the formulae may be substantially        consistent. For example, there may be different processes and        parameters for voluntary withdrawals due to health reasons than        without such a reason. For illustration of the calculations,        assume that the participant has full discretion at all times,        and there is only set of processes and parameters for reason, w.    -   b. The number of units for withdrawal is based on the starting        units (i.e., at time t−1) valued at the end of period NAV(i.e.,        at time t), or equivalently asset value at the end of period        value (i.e., at time t)    -   c. Amount to be withdrawn is defined as WA(p,f,t|w). This can be        specified in several different ways that ultimately determine        the number of units in each sub-fund g that will be sold to        generate the proceeds to make the early withdrawal payment. At        the most granular level, if the fund's rules allow it, the        participant can explicitly state the number of units in each lot        that would be sold to generate the proceeds on withdrawal. The        fund's rules would also allow a more formulaic selection of        units to be sold, as the following example illustrates:        -   i. A participant specifies the percentage Wpercent(p,f,t|w)            of invested assets A(p,f,t) to be withdrawn. This results in            the sale of the same proportion of assets and units in each            lot q of the sub-funds g. Applying the lower return on early            withdrawal to each lot in each sub-fund, the amount to be            withdrawn is written (similar to payout on death) as:            WP(p,f,t|w)=Wpercent(p,f,t|w)×Σ₁ ^(G)Σ₁ ^(Q)            U(p,q,f,g,t−1)×LAV(p,q,f,g,t|w)        -    or as a short-hand at the fund level, as:            WP(p,f,t|w)=Wpercent(p,f,t|w)×S(p,f,t−1)×LAV(p,f,t|w)        -   ii. At each lot, q, of sub-fund, g, the units and resulting            assets sold are:            -   A. Lots sold:                WU(p,q,f,g,t)=U(p,q,f,g,t−1)×Wpercent(p,f,t|w)            -   B. Assets sold:                WA(p,q,f,g,t)=A(p,q,f,g,t)×Wpercent(p,f,t|w)            -   C. Summing across all lots and sub-funds, total assets                sold by the participant is:                WA(p,f,t)=Σ₁ ^(G)Σ₁ ^(Q) WA(p,q,f,g,t)            -   D. Check: WA(p,f,t)=A(p,f,t)×Wpercent(p,f,t|w)            -   E. Amount paid on withdrawal is WP(p,f,t|w)            -   F. The difference between the assets sold and the amount                paid to beneficiaries is the contribution to the DR due                to this event, i.e.                CDR(p,f,t)=WA(p,f,t)−WP(p,f,t|w)    -   d. Any withdrawal will result in a proportional reduction in the        units of the DR sub-fund since the allocation of the DR sub-fund        represents a proportional participation in the Demographic        Return generated by all the participants in the fund. Note that        if a partial withdrawal is made, and the fund rules permit, the        participant may receive an allocation of the total contribution        to the DR in that period, based on the value of their remaining        assets.-   3. Scheduled Payout:    -   a. The participant has a pre-arranged payout schedule, per the        rules of the fund. This schedule can be set at each lot level,        i.e. there is a payout schedule that is selected by a        participant to apply to each investment lot, or it can be set at        a higher level of aggregation such as at the participant level,        i.e., the payout schedule applies to all lots across all        sub-funds owned by the participant. The schedule will require        the sale of sub-fund units with the proceeds payable to the        participant at full value without any reduction, after deducting        any fees charged at that stage.    -   b. Units are held until the payout start date, b, and the last        shares and units are sold on the payout end date, e. The payout        schedule defines the number of shares and units sold at each        payout date, t, between and including dates b and e. Any payout        pattern is permissible, subject to the rules set by the asset        manager. At the most granular level, if the fund's rules allow        it, the participant can explicitly state the number of units in        each lot that would be sold to generate the proceeds on a        scheduled payout date. The fund's rules may require that the        scheduled number of units must be sold on a scheduled date.        Alternatively, the fund's rules may allow any number of units to        be sold from zero up to the maximum scheduled number of units,        and that any units not sold on a scheduled date may be sold at        some later scheduled or unscheduled date, at a value to be        determined at that time based on either the NAV, the LAV or some        combination thereof. The fund's rules would also allow a more        formulaic selection of units to be sold, as the following        example illustrates. In the example, the rule requires a sale of        assets proportional to the number of remaining payout dates. The        mechanics are identical to voluntary early withdrawal just        above, except that the full asset proceeds are paid out. For        completeness, the steps are set out below.    -   c. Amount to be paid per schedule is SA(p,f,t). This can be        specified in several different ways that ultimately determine        the number of units in each sub-fund g that will be sold to        generate the proceeds to make the early withdrawal payment. For        example:        -   i. Percentage Spercent(p,f,t) of invested assets A(p,f,t−1)            can be sold on a payout date where

${{{SPercent}( {p,f,t} )} = \frac{1}{t - e}},$

-   -   -    for b≤t≤e        -   ii. This results in the sale of the same proportion of            assets and units in each of the sub-funds g:            SA(p,f,t)=Spercent(p,f,t)×A(p,f,t))        -   iii. At each lot, q, of sub-fund, g, the units and resulting            assets sold are:            -   A. Lots sold:                SU(p,q,f,g,t)=U(p,q,f,g,t−1)×Spercent(p,f,t)            -   B. Assets sold:                SA(p,q,f,g,t)=A(p,q,f,g,t)×Spercent(p,f,t)            -   C. Summing across all lots and sub-funds, total assets                sold by the participant is:                SA(p,f,t)=Σ₁ ^(G)Σ₁ ^(Q) SA(p,q,f,g,t)            -   D. Check: SA(p,f,t)=A(p,f,t−1)×Spercent(p,f,t)            -   E. Amount paid on scheduled payout is                SP(p,f,t)=SA(p,f,t)

-   4. Deposits by current participants    -   a. A participant can make additional deposits into the fund at        any time, even while receiving scheduled payouts or after making        a voluntary early withdrawal (but obviously not after the        account is closed on death or for some other reason). The amount        of assets deposited by participant p in fund fin the interval        t−1 to t is defined by DepA(p,f,t). If required, this is easily        restated as a percentage increase in starting assets by dividing        the deposit amount by the starting assets that the participant        has in the fund, i.e.        DepPercent(p,f,t)=DepA(p,f,t)÷A(p,f,t−1)        -   b. Each deposit is allocated to specific sub-funds based on            the participant's election. Note that in this illustrated            embodiment, the participant will not be able to invest            directly in the DR sub-fund since units in that sub-fund are            earned by participating in the PRIA fund, and allocated            whenever CDR is generated. An alternative embodiment may            allow participants to invest directly in the DR funds, and            the fund's rules would specify the terms, conditions,            formulae and calculations to enable implementation.        -   c. Using the notation convention for flows in the interval,            a new deposit results in an allocation to new lot δ in a            specific sub-fund g is:            -   i. Percent of deposit allocated to sub-fund g is                DepAlloc(p,δ,f,g,t)            -   ii. Amount of the deposit in sub-fund g is                DepA(p,δ,f,g,t)=DepA(p,f,t)×DepAlloc(p,δ,f,g,t)            -   iii. Number of units in sub-fund g due to the deposit is                the amount invested divided by the sub-fund's closing                NAV:                DepU(p,δ,f,g,t)=DepA(p,δ,f,g,t)÷NAV(f,g,t)            -   iv. Check: Sum over all new lots and sub-funds should                equal the total new deposit                DepA(p,f,t)=Σ₁ ^(G)Σ_(δ)DepA(p,δ,f,g,t)

-   5. Deposits by new participants    -   a. New participants can join the fund and make deposits at any        time. The mechanics of their participation is identical to the        mechanics for deposits by current participants described in the        previous bullet. The difference from an administrative        standpoint is that a new participant account would have to be        opened before the deposit can be accepted.

-   6. Transfer between sub-funds    -   a. As described above, an asset manager can allow a participant        to transfer assets between sub-funds, within defined        constraints, and potentially paying fees on that event. So long        as the sub-funds are within the same fund, f, there should be no        impact on the DR sub-fund share that such a participant owns,        except for the impact of the fees deducted.        Fund Actions and Flows During Interval t−1 to t

After all the participant actions are recorded and flows calculated asdetailed above, the fund actions described below are addressed andresulting flows calculated. In particular, withdrawals will reduce theamount of assets in a sub-fund and deposits will increase the assets.The fund actions and flows listed below are calculated based on theassets at the start of the period reduced for withdrawals (voluntary,death or scheduled) and increased by deposits (current or newparticipants) during the period.

-   1. Investment earnings on assets    -   a. The asset manager reports the investment earnings for each        sub-fund, g, net of fees charged by the portfolio manager of the        sub-fund, and the amount allocated to each participant's lot.        (If the portfolio manager's fees and the PRIA fees at the        sub-fund level are charged by the asset manager at the same time        at the sub-fund level, then the two fees can be separated and        tracked separately, even if that split is not reported        separately to the participant. This enables proper allocation of        fees for attribution purposes. This is discussed further below.)    -   b. The investment earnings increase the NAV of the sub-fund    -   c. An investor's assets grow by the growth in the NAV    -   d. Investment earnings, net of any portfolio manager fees, in        the interval t to t−1 at each level of aggregation are:        -   i. Unit q: ΔA(p,q,f,g,t)        -   ii. Participant p: ΔA(p,f,g,t)=Σ₁ ^(Q)ΔA(p,q,f,g,t)        -   iii. Sub-fund g: ΔA(f,g,t)=Σ₁ ^(p)Σ₁ ^(Q)ΔA(p,q,f,g,t)    -   e. As an alternative but equivalent mechanism for allocating        earnings, if the asset manager reports the total sub-fund        earnings, then the allocation to each participant and lot would        be made on a pro-rata basis, for example, based on the number of        units held in the sub-fund at the end of the period, adjusting        for in-period withdrawals and new deposits; the mechanics of the        calculation should be verified with the aggregation method of        the previous bullet, and adjusted accordingly:        -   i. Unit q:

${\Delta\;{A( {p,q,f,g,t} )}} = {\Delta\;{A( {f,g,t} )} \times \frac{U( {p,q,f,g,t} )}{U( {f,g,t} )}}$

-   -   -   ii. Participant p:

${\Delta\;{A( {p,f,g,t} )}} = {\Delta\;{A( {f,g,t} )} \times \frac{U( {p,f,g,t} )}{U( {f,g,t} )}}$2. Expenses charged at sub-fund level

-   -   a. At the sub-fund level, there are two broad categories of fees        charged by the asset manager. The first is fees charged by the        portfolio manager of the sub-fund for the regular services of        managing the investments. The second is fees charged for        services and administration for inclusion of the particular        sub-fund within the PRIA fund. The asset manager may combine        these fees into a single charge to the participant. The asset        manager may choose to track these fees separately, for example,        to make comparisons between alternative investment choices for        participants on a consistent basis. In addition to these fees,        the asset manager may charge fees for other services and        participant actions. These include, but are not limited to, fees        on withdrawal of assets via sale of investments, and transfer of        assets between sub-accounts. Fees can differ by fund, f and        sub-fund g so that other investors not in fund f may pay a        different set of fees, if any. Fees may be charged using a        variety of formulae, for example, a fixed fee or a fee based on        a percentage of invested assets. The fees are allocated to        individual investment lots or to each participant in a sub-fund        in a way defined by fund rules. For example, some fees may be        charged based on the proportion of assets or units owned.    -   b. Expenses charged at the sub-fund level in the interval t to        t−1 at each level of aggregation are:        -   i. Unit q: ExpG(p,q,f,g,t)        -   ii. Participant p: ExpG(p,f,g,t)=Σ₁ ^(Q)ExpG(p,q,f,g,t)        -   iii. Sub-fund g: ExpG(f,g,t)=Σ₁ ^(p)Σ₁ ^(Q)ExpG(p,q,f,g,t)    -   c. As an alternative but equivalent mechanism for allocating        expenses, if the asset manager reports the total sub-fund        expenses, then the allocation to each participant and lot could        be made on a pro-rata basis, for example, based on the number of        units held in the sub-fund at the end of the period, adjusting        for in-period withdrawals and new deposits (and to be verified        with aggregate calculations in the previous bullet):        -   i. Unit q:

${{ExpG}( {p,q,f,g,t} )} = {{{ExpG}( {f,g,t} )} \times \frac{U( {p,q,f,g,t} )}{U( {f,g,t} )}}$

-   -   -   ii. Participant p:

${{ExpG}( {p,f,g,t} )} = {{{ExpG}( {f,g,t} )} \times \frac{U( {p,f,g,t} )}{U( {f,g,t} )}}$

-   3. Expenses charged at fund level    -   a. The asset manager can impose charges at the fund level as        well. These expenses can differ by fund, f and are set by the        asset manager. Although the mechanics for charging fees on a        similar basis as a sub-fund are described below for        completeness, it should be recognized that these fees can only        be collected at the fund level from cash flow generated at the        fund level. Since the embodiment being described assumes that        all investments are made at the sub-fund level, and therefore        all earnings are generated at the sub-fund level and not the        fund level, the only fees that can be charged and collected at        the fund level are those that are associated with events where        investments are sold at the sub-fund level, and some or all of        the resulting proceeds are either paid out to the participant or        deposited in another sub-fund. Examples of such fees are those        charged on unscheduled early withdrawal or on a transfer of        assets between sub-accounts.    -   b. If fees are chargeable and collectable at the fund level,        they would be allocated to each participant in a way defined by        fund rules.    -   c. Expenses charged at the fund level in the interval t to t−1        at each level of aggregation are:        -   i. Participant p: ExpF(p,f,t)        -   ii. Fund f: ExpF(f,t)=Σ₁ ^(p)ExpF(p,f,t)    -   d. As an alternative but equivalent mechanism for allocating        expenses, if the asset manager reports the total fund expenses,        then the allocation to each participant would be made on a        pro-rata basis, for example, based on the number of shares held        in the fund at the end of the period, adjusting for in-period        withdrawals and new deposits (and to be verified with aggregate        calculations in the previous bullet):        -   i. Participant p:

${{ExpF}( {p,f,t} )} = {{{ExpF}( {f,t} )} \times \frac{S( {p,f,t} )}{S( {f,t} )}}$

-   4. Contributions to demographic returns (CDR)    -   a. FIG. 11 illustrates the how CDR is created and how it is then        allocated to participants. There are P participants labeled 1 to        P, each with PRIA units 1102 (in sub-funds) with PRIA asset        values 1104. Participant 1 decides to make an unscheduled early        withdrawal of all their assets. This results in the sale of all        sub-fund units 1106. The proceeds of the sale at NAV are split        into two parts. The first part values the units at LAV, which is        less than the NAV 1108, and that is paid to the participant on        withdrawal. The second part is the difference between the units        valued at NAV and at LAV 1110, which is the CDR. This amount is        retained by the asset manager and invested in the DR sub-fund,        and is allocated to each remaining participant per the fund        rules 1112.    -   b. During each interval t to t−1, early withdrawals from the        PRIA funds generate contributions to the DR sub-fund as        described above.        -   i. Total CDR generated: CDR(f,t)=Σ₁ ^(P) CDR(p,f,t)        -   ii. This is an additional source of assets, besides the            investment earnings, that are contributed to the DR sub-fund            and. The CDR generates new units that can be allocated to            remaining participants. In this embodiment, the CDR itself            does not increase the NAV of the DR sub-fund. The product of            the new units and the NAV is the total CDR generated.    -   c. The total contribution generated across all participant        actions have to be allocated to the remaining participants in        the fund using allocation rules defined by the fund, for example        pro-rata based on the number of assets or shares held in the        fund at the end of the period net of in-period withdrawals.        -   i. For allocation of the DR, the asset values used are only            partially updated from the starting values        -   ii. The starting values are increased for investment            earnings net of sub-fund expenses and reduced for any            withdrawal of assets, and do not consider any new deposits            or any potential increase in the DR sub-fund assets        -   iii. Denote this partially updated asset value for a            participant at the lot level as            PartialA(p,q,f,g,t)        -   iv. A participant's investment is valued at:            PartialA(p,f,t)=Σ₁ ^(G)Σ₁ ^(Q)PartialA(p,q,f,g,t)        -   v. The total assets invested in fund f has partially updated            value of:            PartialA(f,t)=Σ₁ ^(p)Σ₁ ^(G)Σ₁ ^(Q)PartialA(p,q,f,g,t)    -   d. Any participant who makes a voluntary early withdrawal will        have a net effect of 2 items. The first is the reduction in the        participant's amount of DR sub-fund assets and units reflecting        a proportion of the amount withdrawn. The second is the increase        in the participant's amount of DR sub-fund assets and units        resulting from an allocation of the CDR generated by that        withdrawal    -   e. In this embodiment, new deposits do not receive an allocation        of the CDR generated in that period. The fund's rules would        define the first period from which new deposits would be able to        receive an allocation of the CDR generated in that period, for        example, from the period following the deposit, or after a        certain number of days, months or years from deposit.    -   f. The addition of new funds to the DR fund is treated as a new        deposit by a participant, so it follows the mechanics above. The        deposit will be treated as new investment lot, θ.        -   i. Amount of deposit in DR sub-fund for participant p during            interval t−1 to t is

${{DepA}( {p,\theta,f,{DR},t} )} = {{{CDR}( {f,t} )} \times \frac{{PartialA}( {p,f,t} )}{{PartialA}( {f,t} )}}$

-   -   -   ii. Number of units in DR sub-fund due to the deposit is            amount invested divided by the DR sub-fund's closing NAV:            DepU(p,θ,f,DR,t)=DepA(p,θ,f,DR,t)÷NAV(f,DR,t)        -   iii. Check: Sum over all new lots for all participants            should equal the total CDR            CDR(f,t)=Σ_(θ)DepA(p,θ,f,DR,t)            Ending Values at t

Once all the in-period flows have been calculated, the ending values ofassets, units and shares can be calculated and then sent back to theasset manager administration system. Update from the most granular leveland then aggregate as described in the Starting values section.

-   1. For participant p's lot q in fund f's sub-fund g    -   a. Assets in g:        -   i. Reduce starting assets by amount of any withdrawals            (voluntary, death, scheduled), add new deposits and            investment income and deduct expenses.        -   ii. For the DR sub-fund, add the net increase in CDR        -   iii.            A(p,q,f,g,t)=A(p,q,f,g,t−1)−WA(p,q,f,g,t|w)−DA(p,q,f,g,t)−SA(p,q,f,g,t)+DepA(p,δ,f,g,t)+ΔA(p,q,f,g,t)−ExpG(p,q,f,g,t)+{depA(p,θ,f,DR,t)            if g=DR sub-fund}    -   b. Units in g:        -   i. Units are decreased and increased by withdrawals and new            deposits        -   ii. Units are not changed due to investment income and            expenses (which change NAV)        -   iii.            U(p,q,f,g,t)=U(p,q,f,g,t−1)−WU(p,g,f,g,t|w)−DU(p,q,f,g,t)−SU(p,q,f,g,t)+DepU(p,δ,f,g,t)+{DepU(p,θ,f,DR,t)            if g=DR sub-fund}    -   c. Check: A(p,q,f,g,t)=NAV(f,g,t)×U(p,q,f,g,t)    -   d. This information is returned to the asset manager        administration system. The asset manager should be able to        validate their own calculations for units and asset values for        all the non-DR sub-funds. In an alternative embodiment, the        asset manager administration system may perform these        calculations for the non-DR sub-funds, which may then be        validated in the PRIA overlay system. The new data for the asset        manager is the updated DR sub-fund units and values and the fund        f shares and values. Aggregation can then be done in the same        way as for Starting values. For completeness, that is described        in full below.-   2. (P,G,F) Participant and fund perspectives: Sum over all lots q to    give participant p's investment in fund f's sub-fund g:    -   a. Assets in g: A(p,f,g,t)=Σ₁ ^(Q)A(p,q,f,g,t)    -   b. Units in g: U(p,f,g,t)=Σ₁ ^(Q)U(p,q,f,g,t)    -   c. Check: A(p,f,g,t)=NAV(f,g,t)×U(p,f,g,t)-   3. (P,F) Sum over all sub-funds g to give participant p's total    investment in fund f    -   a. Assets in f: A(p,f,t)=Σ₁ ^(G)A(p,f,g,t)=Σ₁ ^(G)Σ₁        ^(Q)A(p,q,f,g,t)    -   b. Shares in f: S(p,f,t)=A(p,f,t)×S(f,t)÷A(f,t)        -   i. Meaningless to aggregate units in g over all sub-funds        -   ii. Shares, S, in f signify proportion of total fund f            assets owned by participant p    -   c. Check: A(p,f,t)=S(p,f,t)×SAV(f,t)-   4. (F) Sum over all participants p to give total investment in fund    f    -   a. Assets in f: A(f,t)=Σ₁ ^(P)A(p,f,t)=Σ₁ ^(p)Σ₁ ^(G)Σ₁        ^(Q)A(p,q,f,g,t)    -   b. Shares in f: S(f,t)=Σ₁ ^(P)S(p,f,t)    -   c. Check: A(f,t)=S(f,t)×SAV(f,t)        Next, aggregate from a sub-fund's perspective up to the fund        level. The starting point is the same as in the first two        bullets, so those are not repeated here.-   5. (G.F) Sum over all participants p to give total investment in    fund f's sub-fund g:    -   a. Assets in f: A(f,g,t)=Σ₁ ^(P)A(p,f,g,t)=Σ₁ ^(p)Σ₁        ^(Q)A(p,q,f,g,t)    -   b. Units in g: U(f,g,t)=Σ₁ ^(P)U(p,f,g,t)=Σ₁ ^(P)Σ₁        ^(Q)U(p,q,f,g,t)    -   c. Check: A(f,g,t)=NAV(f,g,t)×U(f,g,t)-   6. (F) Sum over all sub-funds g to give total investment in fund f:    -   a. Assets in f: A(f,t)=Σ₁ ^(G)A(f,g,t)=Σ₁ ^(G)Σ₁ ^(P)Σ₁        ^(Q)A(p,q,f,g,t)    -   b. Units are not aggregated since that is meaningless    -   c. Check: A(f,t) is the same value as calculated in bullet 4        above        Next, aggregate up to the asset manager level.-   7. (P,M) Sum over all funds f to give participant p's total    investment in asset manager M's PRIA funds:    -   a. Assets in M: A(p,t)=Σ₁ ^(F)A(p,f,t)=Σ₁ ^(F)Σ₁ ^(G)Σ₁        ^(Q)A(p,q,f,g,t)    -   b. Shares in f are not aggregated since that is meaningless-   8. (M) Sum over all funds f and participant p to give the total    assets in M's PRIA funds:    -   a. Assets in M: A(t)=Σ₁ ^(P)A(p,t)=Σ₁ ^(P)Σ₁ ^(F)Σ₁ ^(G)Σ₁        ^(Q)A(p,q,f,g,t)    -   b. Check: A(t)=Σ₁ ^(F)A(f,t) which sums the assets in bullet 6        above        In addition to these ending values, the following per unit or        per share values would also be calculated:-   9. Net asset value, NAV, of sub-fund, g:    -   a. NAV is

${{NAV}( {f,g,t} )} = \frac{A( {f,g,t} )}{U( {f,g,t} )}$

-   -   b. Check NAV for each lot: A(p,q,f,g,t)=U(p,q,f,g,t)×NAV(g,t)

-   10. Share asset value, SAV of fund, f:    -   a. The SAV is updated in proportion to the growth in asset value        over the period, i.e.,

${{SAV}( {f,t} )} = {\frac{A( {f,t} )}{A( {f,{t - 1}} )} \times {{SAV}( {f,{t - 1}} )}}$

-   -   b. A participant's share in fund f is then updated in proportion        to the assets invested, i.e.,

${S( {p,f,t} )} = {\frac{A( {p,f,t} )}{A( {f,t} )} \times {S( {f,t} )}}$

-   -   c. Check NAV for each participant: A(p,f,t)=S(p,f,t)×SAV(f,t)        Considerations for PRIA Fund Implementation.

Having described the PRIA systems, software, and calculations in somedetail, there are some practical implementation aspects that areconsidered as part of this invention.

Legal Form:

The legal form of a PRIA fund, and of its sub-funds, will depend on thelaws and regulations in place at the time and place of itsestablishment. In one embodiment, the PRIA fund is set up as aninvestment trust, and the sub-units are sub-accounts of that trust. Inanother embodiment, the PRIA fund is set up as an investment company,with all participants also acting as shareholders; the DR sub-fund thenbecomes the retained assets that are allocated proportionately to theparticipant shareholders. In another embodiment, the PRIA fund is set upas a fund-of-funds investment vehicle, with investors able to allocatetheir investments to the available sub-funds. These examples highlightthe claim that embodiments of this invention can be structured andimplemented in different ways that preserve the innovation describedherein.

Regulatory Treatment:

Since the PRIA fund operates as an investment fund, its treatment in theUS should be consistent with other investment funds. In other regulatoryenvironments, the same treatment should apply if the same criteria areconsidered. However, there may be other reasons why a PRIA fund may beregulated differently in other jurisdictions. For example, in somejurisdictions, it may be regulated as an insurance fund, even though itdoes not operate as one, as defined earlier in this document. Theinvention described herein can be implemented under different regulatorytreatment as well, since the invention does not rely on a particularregulatory treatment in order to be economically viable.

Source of Funds and Tax Treatment:

The legal form and regulatory treatment will influence the tax treatmentof PRIA investments for both the asset manager and the individualinvestor. The source of the investment funds and the form of anyassociated retirement plan will also determine the tax treatment. In thedescription above, the initial and periodic deposits into a PRIA fundwere identified as being made by the individual investor. With manyretirement savings plans, the source of funds available to an individualare the individual's own contributions from either pre-tax or after-taxsavings, an employer's contributions as part of a defined contributionor similar retirement plan, and government contributions as part of anational savings program. Irrespective of the source of funds and typeof savings plan, the mechanics of the PRIA fund described herein stillapply since all those funds are available to invest in a mannerdetermined by the individual investor. Their tax treatment, however, maybe different. In the US, for example, the following summarizes some ofthe possible tax treatments:

-   -   i. If PRIA is offered as an investment option under a qualified        employer-sponsored retirement plan (e.g., 401(k)), then all        capital gains and income earned during the accumulation phase        would not be taxed, but all withdrawals would be taxed as        ordinary income.    -   ii. If PRIA is offered as an investment option under a qualified        Individual Retirement Account (IRA), then all capital gains and        income earned during the accumulation phase would not be taxed,        but all withdrawals would be taxed as ordinary income.    -   iii. If PRIA is offered through an ordinary non-qualified        investment account, where the investment deposits are made from        after-tax savings, then all capital gains and income would be        taxed as it is vested and earned.    -   iv. If PRIA is offered as an insurance company Separate Account        (in which case some insurance features may have to be added),        then all capital gains and income earned during the accumulation        phase would not be taxed, but all withdrawals would be taxed as        ordinary income.        Outside the US, other savings programs may also utilize PRIA.        For example:    -   i. If PRIA is offered as a supplementary savings vehicle to a        country's national retirement program, then PRIA deposits may be        sourced from both additional individual contributions and        re-allocation of accumulated savings in the national retirement        program, and the tax treatment would be based on the country's        local laws.    -   ii. If an employer-sponsored defined contribution plan is        offered using PRIA as the means by which an employer and        individual participants make contributions and select investment        choices, then the tax treatment may be consistent with other        retirement plans in the country.        These examples illustrate the variety of ways in which PRIA can        be implemented, but they are not meant to be an exhaustive list.

Fund Complexity:

The design of the PRIA fund and its sub-funds can range from the verysimple to the very complex, as illustrated in FIG. 12. A complex PRIAfund 1202 has several sub-funds, each of which can be a different typeof investment vehicle, ranging for example, from a single security to amutual fund. This illustration shows a complex fund design with Gsub-funds, one of which is the DR sub-fund 1204. It is feasible for thecomplex fund design to include more than one DR sub-fund. For allpractical purposes, since the DR sub-fund(s) are managed at thediscretion of the asset manager, and that in the illustrated embodimentthe participant cannot buy units in it or sell units in it at theirdiscretion, multiple DR sub-funds that each conform to the rulesestablished for the PRIA fund would have the same impact as if they wereall collapsed under a single DR sub-fund and managed at the discretionof the asset manager. Therefore, showing one sub-fund DR is sufficientto capture a complex fund design. In an alternative embodiment, if aPRIA fund is established with several DR sub-funds with different rulesapplying to each separate DR sub-fund, then it would not be feasible tocollapse them into a single DR sub-fund.

The PRIA fund design can be simplified so that the asset manager offersonly one sub-fund that the participant can invest in, and only one DRsub-fund 1206. In this case, there would be no difference in thecalculations performed for the complex design 1204, and those performedfor the less complex design 1206, other than the number of sub-funds.

The simplest fund design would be a single fund 1208 through which allinvestments are made, and in which the DR assets are commingled with thenon-DR assets. Conceptually, this is the same as the less complex design1206, except that the two sub-funds (one available for investing and theother the DR sub-fund) are merged into one. The calculations describedabove could be simplified somewhat since the distinction between a fundand a sub-fund need not be made. Otherwise, the calculations remainessentially the same as in the other PRIA fund designs.

Payout Schedule Specification:

As noted above, a participant self-selects a payout schedule atinception, and may be permitted to modify this schedule from time totime by the asset manager's fund's rules. There are several ways inwhich an asset manager may implement the specification of a payoutschedule. In one embodiment, a participant may be permitted to specify asingle payout schedule that applies to all the lots that the participantowns in all the sub-funds, and the participant designates which lots areto be sold fully, or in part, at each payment date to meet the scheduledpayout. At the other extreme, another embodiment may permit aparticipant to treat each new deposit separately and independently ofthe payout schedule of another lot, and the distinct PRIA fund account(and account number) for each deposit that the participant makes in thatsame PRIA fund. In another embodiment, an asset manager may permit aparticipant to open several accounts, each with a distinct payoutschedule that applies to all lots from initial and subsequent depositsmade through that account.

LAV Formulation:

As noted earlier, the LAV formulation drives the amount of DR generated.This means that the LAV formula and the associated DR fund are tiedtogether. An asset manager can choose to offer PRIA funds that differ byLAV formula, but are otherwise the same. For example, a PRIA fund with arelatively lower LAV than another PRIA fund could attract participantswho want to maximize the potential growth in their investment portfolio,and are willing to leave a lower amount to their heirs upon death, orare willing to accept a lower return on early withdrawal. In analternative embodiment, an asset manager may choose to offer one PRIAfund, with different series of mini-PRIA funds, each having their ownLAV formula and associated DR sub-fund, and a common set of sub-fundsfor all participants. This embodiment is identical to one where eachmini-PRIA fund is set up as an independent PRIA fund with its own LAVand associated DR sub-fund.

Vesting:

An embodiment of the invention can include a feature where participantshave to be vested in the PRIA fund before some features are available tothem. For instance, they may be required to be participants for aminimum period, say 2 years, before they are credited with any DR units.Alternatively, a vesting schedule may be introduced as a factor in theLAV formula to determine the payout on early withdrawal.

Bonus Units:

An embodiment may include some funds that may offer bonus units atvarious times. The units credited in the DR sub-fund are essentiallybonus units since there is no additional investment required of theparticipant in order to earn those units. Other factors may be used toenable participants to earn bonus credits, which are then used toallocate DR or other sub-fund units.

Loans:

Some PRIA funds may permit investors to take loans against theirinvested assets. Loans are a useful way to allow participants to obtainfunds without having to sell their shares investments in the fund. Thereare likely to be regulatory limitations on loans that are available frominvestment funds. However, loans from investment funds are fairlycommon, as evidenced by the operation of margin accounts with investmentfunds. Such a loan facility would have to implement specific rules torecognize that not all of a participant's invested assets areimmediately available on demand. For example, loans may only be madeagainst assets invested in non-DR sub-funds, and the collateralcalculation would be based on the LAV and not on the NAV.

On withdrawal or payout before the loan is fully repaid, the proceeds ofunit sales would be used to pay down the loan before any funds are paidto the participant. Interest on any outstanding loan can be paiddirectly by the participant or be drawn as an additional loan from thefund.

2^(nd)-to-die PRIA funds: Some annuities offer the opportunity forindividuals to receive annuity income until the 2^(nd) of two annuitantsdies. These 2^(nd)-to-die annuities can be useful for married couples,for example, who require income while both of them are living, and wantthat income to continue while only one of them is living, even if theamount is reduced at that point. Conventional investment funds are notstructured with a 2^(nd)-to-die feature. A PRIA fund can be structuredto offer a feature that mimics the 2^(nd)-to-die feature, even though itis not an annuity or guaranteed.

To ensure equity with other participants, one embodiment of a2^(nd)-to-die PRIA fund could be set up so that only joint investors canparticipate at inception, and they can continue to make deposits so longas the account remains in joint name. The scheduled payout pattern wouldbe modified to reflect payouts when both parties are alive and when onlyone is alive. There may also be some limitations on the relationship ofthe joint account holders so as to ensure that there is a bona fiderelationship between the two that is appropriate for investing in such afund. For example, spouses may be allowed since their age gap tends tobe fairly narrow, although a parent and child may not be allowed sincetheir age gap is quite wide.

Guarantees:

Some investors may want to invest in funds that offer certain investmentor payout guarantees. Such guarantees are not envisaged within a PRIAfund. They can, however, be offered through a separate contract with anappropriately licensed financial institution (e.g., an insurer), withthe guaranteed benefits coordinating with the payout pattern expectedfrom the PRIA fund. For example, a participant who wishes to have alifetime annuity income may be able to buy such an annuity commencingonce their PRIA assets have been substantially or fully liquidated. Inthat case, such an annuity would start at a later date than anindividual's normal retirement date, and would consequently be cheaperto buy.

Alternatively, a guarantee can be integrated into the PRIA fund design,in which case more complex accounting and reserving treatment may berequired, similar to products offered by insurance companies.

In some embodiments, the system implements a combination ofcharacteristics and restrictions within the system that together providesignificant advantages that were not previously contemplated orunderstood. The system can provide an unrestricted investment option.Participants would not need to go through an underwriting process andparticipants in each fund would not need to be required to be in thesame demographic classification (insurance classification) in order tostabilize insurance risks. The system can implement the fund to be openended in that there is no set date of closing or terminating the fund.The system can keep the fund open and allow participants to join and endtheir participation over time and to allow withdrawals and deposits overtime in the open rolling fund. For example, the system can configure thefund to continue to reconstitute itself with new participants as earlierparticipants terminate their accounts or are paid to completion undertheir payment schedule. The system can be configured to be withoutguarantees on the rate of return or the amount of benefit that theparticipant will receive. The system will provide the benefit based onrolling change in the funds deposited into the demographic fund thatresults from new deposits and permitted withdrawals. The system willalso provide the benefit of participants market return on theirinvestment (subject to the restrictions that certain withdrawal willtrigger an automatic deduction and deposit in to the demographic returnfund). The system can also implement a restriction that tracks whetherparticipants have died and terminates those accounts as earlywithdrawals to the extent they have not been paid under their prescribedschedule. As such, the system can potentially prevent the account to bepassed to and possessed by one or more beneficiaries and requires thetermination. The system can also evaluate whether an early withdrawal istaking place and applies the automatic deduction. Another system benefitcan be that the participant's ownership in the demographic return fundcan be significantly funded by others in the fund, those who died earlyor withdrew their funds before payments under the schedule. Thisarrangement can motivate the fund to be long term investment andmotivate participation in the fund based on the expectation that theparticipant will outperform other participants and will be enriched bythe other participants. The system can also have an automated processfor checking whether to close the fund based on one or more thresholds.In combination of some or all of these, and other aspects mentionedherein, the systems can provide a new tool for advancing data managementand driving investment, which may have particular motivation forretirement directed investing.

As described above, a computer or computer system with networkconnections and data storage implement features and embodiments of thepresent invention. The computer or computer system can communicate andinteract with other devices to receive funds or information, authorizeor authenticate participants, formulate and report current values to enddevices, or provide other functionality, tools, or interactions.Referring to FIG. 13, Computer system 1 can include a display interface2 that forwards graphics, text, and other data from the communicationinfrastructure 6 (or from a frame buffer not shown) for display on thedisplay unit 30. As such, computer system can generate signals orcontrol the generation and display of graphics, GUI, other visuals orrelated interactivity on an attached display or a remote computer system(e.g., a PC client through a web browser). Computer system 1 alsoincludes a main memory 8, preferably random access memory (RAM), and mayalso include a secondary memory 10. The secondary memory 10 may include,for example, a hard disk drive 12 and/or a removable storage drive 14,representing a floppy disk drive, a magnetic tape drive, an optical diskdrive, etc. The removable storage drive 14 reads from and/or writes to aremovable storage unit 18 in a well-known manner. Removable storage unit18, represents a floppy disk, magnetic tape, optical disk, etc., whichis read by and written to removable storage drive 14. As will beappreciated, the removable storage unit 18 includes a computer usablestorage medium having stored therein computer software and/or data.

In alternative embodiments, secondary memory 10 may include othersimilar devices for allowing computer programs or other instructions tobe loaded into computer system 1. Such devices may include, for example,a removable storage unit 22 and an interface 20. Examples of such mayinclude a program cartridge and cartridge interface (such as that foundin video game devices), a removable memory chip (such as an erasableprogrammable read only memory (EPROM), or programmable read only memory(PROM)) and associated socket, and other removable storage units 22 andinterfaces 20, which allow software and data to be transferred from theremovable storage unit 22 to computer system 1.

Computer system 1 may also include a communications interface 24.Communications interface 24 allows software and data to be transferredbetween computer system 1 and external devices. Examples ofcommunications interface 24 may include a modem, a network interface(such as an Ethernet card), a communications port, a Personal ComputerMemory Card International Association (PCMCIA) slot and card, etc.Software and data transferred via communications interface 24 are in theform of signals 28, which may be electronic, electromagnetic, optical orother signals capable of being received by communications interface 24.These signals 28 are provided to communications interface 24 via acommunications path (e.g., channel) 26. This path 26 carries signals 28and may be implemented using wire or cable, fiber optics, a telephoneline, a cellular link, a radio frequency (RF) link and/or othercommunications channels. In this document, the terms “computer programmedium” and “computer usable medium” are used to refer generally tomedia such as a removable storage drive 14, a hard disk installed inhard disk drive 12, and signals 28. These computer program productsprovide software to the computer system 1.

Computer programs (also referred to as computer control logic) arestored in main memory 8 and/or secondary memory 10. Computer programsmay also be received via communications interface 24. Such computerprograms, when executed, enable the computer system 1 to perform thefeatures of embodiments of the present invention, as discussed herein.In particular, the computer programs, when executed, enable theprocessor 4 to perform such features. Accordingly, such computerprograms represent controllers of the computer system 1.

In an embodiment where the invention is implemented using software, thesoftware may be stored in a computer program product and loaded intocomputer system 1 using removable storage drive 14, hard drive 12, orcommunications interface 24. The control logic (software), when executedby the processor 4, causes the processor 4 to perform the functions orfeatures described herein. Data as part of one or more databases orstorage structures can also be part of the computer system and worktogether with the other components to provide new tools operations,systems, or features to managers and participants. In anotherembodiment, the features are implemented primarily in hardware using,for example, hardware components, such as application specificintegrated circuits (ASICs). Implementation of the hardware statemachine so as to perform the functions described herein will be apparentto persons skilled in the relevant art(s). In yet another embodiment, acombination of both hardware and software can be used.

A computer system can be used that comprises one or more computers orcomputer systems. Depending on the arrangement, a display unit that isattached to the computer system (e.g., using a VGA cable) or to one ofthe computer systems may not be necessary. A computer system and acomputer are used interchangeably throughout the description.

As shown in FIG. 13, embodiments of the present invention may beimplemented using hardware, software, or a combination thereof, and maybe implemented in one or more computer systems or other processingsystems.

The local storage can include volatile memory (such as RAM) and/ornon-volatile memory (such as ROM as well as any supplemental levels ofmemory, including but not limited to cache memories, programmable orflash memories and read-only memories). Additionally, any storagetechniques used in connection with the presently disclosed method and/orsystem may invariably be a combination of hardware and software.

One or more features illustratively described herein can be implementedindividually or in various combinations. The present system, method, orrelated inventions also relate to a non-transient computer readablemedium and can include one or more software applications that implementembodiments of the system on hardware. The software application can be aset of instructions readable by a processor and stored on thenon-transient computer readable medium. Such medium may be permanent orsemi-permanent memory, such as hard drive, floppy drive, optical disk,flash memory, ROM, EPROM, EEPROM, etc., as would be known to those ofordinary skill in the art.

The computer or computer system can communicate and interact with othercomputers or computer systems such as those of banks, participants, oradministrators. Such interaction can be with mobile devices, laptops, orother types of computer or computers systems. A software application orwebsite can be implemented to provide end users access to features andinteractivity of the computer system that implements and provides theinvestment fund having the demographic return feature. The computersystem that provide the investment fund (and include relatedinfrastructure) are preferably configured to send signals or packets toend devices that are executed or used by the end devices to generatedata, graphics, interactive tools, or other features. As such, thecomputer system can include an interface that sends signals or packetsthat when received generate a user interface or other prescribedfunctionality on end devices.

It will be understood by those of ordinary skill in the art thatdescribed interfaces, components, or modules are related to descriptionsherein when the descriptions are directed to the same or relatedfeatures of the interface, component, or module.

Embodiments of the present invention are described as an overlay system.In other embodiments, the system would not be implemented as an overlaysystem but would instead be a standalone system (which of course wouldalso communicate with other systems as described herein or asappropriate). The technology described herein would form the standalonesystem that incorporates the overlay system into an integrated systemfor PRIA.

Features or characteristics described in one context, process, or deviceare applicable to other context, process or devices described herein.The steps of the processes illustratively described herein can beperformed in a different order, if desired. Also, steps could be addedor removed from the processes illustratively described herein. Theprocesses, features, or steps illustratively described herein can beimplemented in software and data (in computer readable medium, transientand/or nontransient) using the described examples of hardware andnetwork configurations.

It should be understood that features or functionality described hereinsuch as by way of different functional block diagrams can be implementedwith one or more computer systems (a single computer or multiplecomputers) and with one or more software modules that can be implementedin a single or multiple computer to provide one or more of the featuresor functionality.

For the purpose of clarification, to the extent that the descriptionherein does not explicitly state that certain described portions arecomputer implemented or are carried out using computers, it would beunderstood to those of ordinary in the skill in the art from thespecification that a computer implemented configuration is contemplated.

In general, the use of “may” or “can” indicates that this oneimplementation, but technology is not limited just to this oneimplementation.

It would be understood that it is within contemplation that differentfeature, steps, or processes can be combined to arrive at newinventions.

The terms and expressions which have been employed in the specificationare used as terms of description and not of limitations, there is nointention in the use of such terms and expressions to exclude anyequivalents of the features shown and described or portions thereof, butit is recognized that various modifications are possible within thescope of the claims to the invention.

What is claimed is:
 1. A computer implemented system comprising: anelectronically demographic return fund that is created, managed andexists only within a new type of open-ended investment program, and itsprocesses and system to implement the transfer of wealth betweenunrelated individual participants using a new method (that is not usedby insurance companies or by actuaries) and system that eventuallyprovides participants with an income stream; a fund design system thatenables an asset manager to design, customize and simulate features ofthe system that includes the investment program, and within it, one ormore pre-existing investment funds (which also exist outside of theinvestment program) and one or more demographic return funds (whichexist only inside the investment program); an asset manager applicationsystem to administer the operation of the investment management systemas an overlay within the asset manager's firewall; a participantapplications portal to enable users (individual participants and theirfinancial advisors) to simulate, test and customize the options theyselect to manage their wealth; wherein: the electronically manageddemographic return fund is created automatically at inception of thesystem and operates automatically by electronic signals that implementthe design selections by the asset manager so that: a demographic returnaccount is created automatically for each participant on the date theyjoin and in which ownership units are automatically allocated andwithdrawn (used) based on the electronic signals that track aparticipant's entry and exit events over time; wealth is automaticallytransferred from the pre-existing investment funds into the demographicreturn fund only when a participant exits the system through death orother full or partial exit (withdrawal), and that wealth amount isimmediately expressed as ownership units in the demographic return fund;a participant receives automatic allocations of ownership units due tothe transfer of wealth from other participants, and never makes adeposit of funds into their own demographic return account; aparticipant is not allowed to discretionarily buy additional ownershipunits or discretionarily sell ownership units in their demographicreturn account a participant is not entitled to all the assetsrepresented by the ownership units allocated to their demographic returnaccount, and is only entitled, at each date of the automatic sale ofownership units, to that portion relating to the units that areautomatically sold on their behalf from time to time; a participantreceives automatic payments of income when some ownership units are soldaccording to a pre-determined payout schedule; assets in the demographicreturn fund are managed by a designated asset manager on behalf of allparticipants, and not by the individual participants themselves; thefund design system is configured to be used by a user (an asset manageror their advisor) to: design, customize and simulate the operation of aninvestment program that includes pre-existing investment funds and ademographic return fund; the fund design system is configured toinclude: a menu from which a user can select several demographic returnfund features to customize and test, and ultimately develop a version tobe offered to participants; a menu to select pre-existing investmentfunds (e.g., savings and retirement accounts including IRAs and 401(k)accounts) available in the open market to simulate where investors mymake discretionary deposits and withdrawals of their wealth (savings)into asset classes (e.g., stocks, bonds, mutual funds) within suchpre-existing investment funds, loading data regarding characteristics ofavailable asset classes such as historical performance and drivers forfuture performance of those selected pre-existing investment funds; afirst input interface to receive the number of time periods (e.g.,months or years) that the simulation should run; a second inputinterface to receive probability distributions and other statistical,accounting, and operational measures for simulation parameters; a thirdinput interface to specify one or more economic conditions in simulatedfuture scenarios and time horizons; and, in response to the settings andinputs, the fund design system is configured to run simulations of thedemographic return fund customized per the programmed settings and userinputs and then display the simulation output to the user wherein thefund design system is configured to: perform simulations at anindividual participant level, a cohort level (i.e., all individualparticipants who share the same start date on which they join thesystem) and a population level (i.e., all cohorts over all past andfuture start dates on which participants did join and can join),including operations using mortality and withdrawal statistics similarbut not limited to actuarial tables, and generate a level of persistencyof participants in the demographic return fund; allow a user to createthe demographic return fund for implementation and operation using thesettings and inputs developed in the fund design system; the assetmanager application system comprising one or more computers andconnected electronic storage that stores computer-executableinstructions and data that is used by the computer-executableinstructions, wherein the asset manager application system comprises: adata warehouse containing static and dynamic data for administering anasset manager's operations; data integration and data access module thatcontrols input and output into the data warehouse; front, middle, andback-office applications that allow users to manage day-to-dayoperations; synchronous and asynchronous business logic that providesthese applications access to information stored in the data warehouse;business rules and work flows that manages such communications withinthe asset manager application system; an automated fund-terminationcomponent that is configured to determine, as an ongoing process:whether a certain minimum amount of investment remains in the investmentprogram, a certain minimum number of participants remain in theinvestment program, or a certain minimum level of diversity inparticipant classification is maintained, and in response, close theinvestment program when the data reflect that the investment programdoes not meet such operating criteria; wherein the asset managerapplication system is configured to: register the participants in theinvestment program; receive and store personal information about theparticipants; create individual accounts for participants in theinvestment program, the pre-existing investment funds and separately inthe demographic return fund, wherein accounts are available to becreated in the same investment program for participants that are inmultiple classifications; a fund module overlay system implementedbehind a firewall of the asset manager application system and configuredto be an overlay added to the pre-configured conventional asset managerapplication system: that manages many pre-existing investment funds forthe asset manager application system and which communicates with thedata integration and data access module of the asset manager applicationsystem, the front, middle, and back office applications of the assetmanager application system, and synchronous-and asynchronous businesslogic of the asset manager application; wherein the fund module overlaysystem comprises: one or more computers and connected electronic storagethat stores computer-executable instructions and data that is used bythe computer-executable instructions, wherein the one or more computers,the computer-executable instructions, and data, together, configure thecomputer system to provide an interactive application that processes astructure for the operation of the investment program, the pre-existinginvestment funds and the demographic return fund in combination, whereinthe structure governs the operation of the demographic return fundproviding the demographic returns, comprising an increase in ownershipunit value and updating the number of ownership units allocated to eachparticipant, due to the survival of participants in the investmentprogram; whereby the computer is configured to: provide an accountcreation interface through which participants self-select a start dateand payment schedule for a liquidation phase of their account, whereinthe self-select start date can be configured to begin immediately or atsome time in the future; receive and store principal data identifyingone or more investment contribution deposits made by each participantinto their choice of pre-existing investment funds; determine investmentfund ownership from the investment contribution deposited by eachparticipant into their choice of pre-existing investment funds;determine-when an individual participant in the investment program diesand in response, automatically deduct a portion of the total amount(wealth) in the corresponding dead participant's pre-existing investmentfunds and deposit the deducted portion into the demographic return fund;create new ownership units in the demographic return fund when a portionof a dead participant's wealth is deposited into the demographic returnfund, and then allocate the created ownership units to each survivingparticipant in the investment program; determine the allocation ofdemographic return fund ownership units for each participant wheneversuch units are created, or otherwise made available, based on apre-determined allocation method, for instance in proportion to thevalue of their total wealth across all their pre-existing investmentfunds; implement a client life status interface through which aparticipant's death is reported to the system and the systemautomatically closes individual accounts in the investment program uponnotification of each participant's death; implement an automated triggerover a repeated time interval that achieves concurrency between actualactivity in the pre-existing investment funds and the demographic returnfund: wherein the trigger automatically tracks and records participantactions including participant deaths, and in response to the trigger,the computer system automatically applies an operation to thedemographic return fund using information from the tracked activity atthe end of the time interval comprising: automatically changing thedemographic return fund ownership units to remove the dead participant'sownership of demographic return fund units from the demographic returnfund while retaining the value of the removed dead participant'sdemographic return fund ownership units in the demographic return fundand reallocating the returned units to remaining participants, andwherein the participants actions further include (i) withdrawals fromthe pre-existing investment funds due to death, (ii) voluntarywithdrawals from the pre-existing investment funds, and (iii) voluntarydeposits into the pre-existing investment funds, and a participantapplications portal configured to be outside of the firewall that isconfigured to produce an interactive interface for participants tointeract with the asset manager application system and the overlaysystem, wherein the participant application portal provides an interfacethrough which an individual participant and/or their designatedrepresentative can: run simulations to test the consequences ofselecting available options designed and offered by the asset manager,initiate-participation in the investment program and monitor theinvestment profile and performance, and after the participant joins,evaluate consequences of future changes that are available to theparticipant, and implement the changes they select.
 2. The system ofclaim 1 wherein the account creation interface provides each participantwith the option to select from different pre-existing investmentvehicles for application of their investment contribution.
 3. The systemof claim 1 wherein the computer system is configured to include anadministrative interface that provides interactive options that allowfund providers to configure working characteristics of the investmentprogram, the pre-existing investment funds and the demographic returnfund.
 4. The system of claim 1 wherein the computer system is configuredto include a sales system that provides models of the operation of theinvestment program incorporating a demographic return fund.
 5. Thesystem of claim 1 wherein the computer system implements a new type ofopen-ended investment program and within it, one or more pre-existinginvestment funds (which also exist outside of the investment program)and one or more demographic return funds (which exist only inside theinvestment program).
 6. The system of claim 1 wherein the system furthercomprises an interface for interactivity with financial advisors orother intermediaries.
 7. The system of claim 1 wherein the systemfurther comprises that the ownership units in the demographic returnfund are derived from the ownership stake in the investment programusing a specified formula.
 8. The system of claim 1, the system furtherconfigured to receive a request to open an account over networkconnections from a participant and store participant informationspecifying the classification of each participant, use that informationin opening the account and setting up the investment program, and alsouses the data in checking threshold information about classification todetermine whether to close the investment program.
 9. The system ofclaim 1, the computer system is further configured to allow a user togenerate simulations to test an implementation of the demographic returnfund, display graphs of the simulations, and in response to thesimulations, launch a particular design of the demographic return fundusing selected settings.
 10. The system of 9 wherein the computer systemis configured to include, as part of generating simulations and creatingnew designs, options with respect to participant population attributes,historical fund information including historical performance, drivers offuture performance, production variables specifying variables, revenueand expense variables that tracks revenues and expenses as a result ofoffering the demographic return fund, statistical properties specifyingthe probability distributions for parameters and variables that aresubject to dynamic simulations including data that specifies level ofpersistency, economic scenario drivers that specifies the economicconditions in simulated future scenarios and time horizons in which thedemographic return fund is tested, wherein the options are used by thecomputer system to produce one or more simulations.